Question

Bedrock Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:

• The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Bedrock was the consignor.
• The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year.

Based on this information, the correct balance for ending inventory on December 31 is

$412,000

$340,000

$318,000

$362,000

$390,000

Answer 1

• $390,000

Step-by-step explanation:

The goods consigned are owned by the consignor but are located at the consignee's facilities. Therefore, the consigned inventory has to be included on the inventory balance of the consignor who is Bedrock Compnay. In consequence, the inventory shall not be adjusted by this reason.

Regarding the second note, the $22,000 of office suplies that were stored to be used, it is incorrect to include this as part of the balance inventory. These supplies must be handled as if they had been delivered to the users, and, thus, subtracted from the inventory balance.

Make the adjustment: $412,000 - $22,000 = $390,000.

In conclusion, the correct balance for ending inventory on December 31 is $390,000.