Question

Bedrock Company reported a December 31 ending inventory balance of $412,500. The following additional information is also available:

1. The ending inventory balance of $412,500 included $72,100 of consigned inventory for which Bedrock was the consignor.
2. The ending inventory balance of $412,500 included $22,200 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 ______.

Answer 1

The correct balance for ending inventory on December 31 is $390,300

Step-by-step explanation:

Consignment is arrangement where a consignor (the owner of goods) transfers goods to the consignee(the agent) such that the agent can sell the goods on-behalf of the original owner,hence the consigned goods belong to Bedrock Company and have been correctly treated by including them in the closing inventory.

The office supplies are not part of inventory, they are simply consumables for office use,which means they can should be deducted from closing inventory.

Closing inventory $412,500

less office supplies ($22,200)

Adjusted closing inventory $390,300

Answer 2

The correct Ending Balance = $ 390300

Step-by-step explanation:

Ending Balance of inventory = $ 412500

Less Office Supplies = $22,200

The correct Ending Balance = $ 390300

Goods already cosigned are the consignor's inventory unless they are sold. They are not included in the consignee's inventory. So they will be included in the ending inventory.The office Supplies are not the inventory goods. They are daily expense goods and are not included in the inventory.