Question

Jill’s Dress Shop had a beginning balance in its inventory account of $40,000. During the accounting period, Jill’s purchased $75,000 of inventory, returned $5,000 of inventory, and obtained $750 of purchases discounts. Jill’s incurred $1,000 of transportation-in cost and $600 of transportation-out cost. Salaries of sales personnel amounted to $31,000. Administrative expenses amounted to $35,600. Cost of goods sold amounted to $82,300.

Jills Dress shop Cost of available for sale:

Jills Dress shop Ending inventory:

Answer 1

Jill's Dress Shop has a Cost of Goods Available for Sale of $110,250 and an Ending Inventory value of $27,950, calculated by considering beginning inventory, purchases, returns, purchase discounts, and transportation-in costs, but excluding transportation-out costs, sales personnel salaries, and administrative expenses.

Step-by-step explanation:

Calculation of Cost of Goods Available for Sale and Ending Inventory

To calculate Jill's Dress Shop Cost of Goods Available for Sale (COGAS), we start with the beginning inventory, add purchases, subtract returns and discounts, and add transportation-in costs. The formula is:

Beginning Inventory + Purchases - Returns - Purchase Discounts + Transportation-in = COGAS

For Jill's Dress Shop:

$40,000 (Beginning Inventory) + $75,000 (Purchases) - $5,000 (Returns) - $750 (Purchase Discounts) + $1,000 (Transportation-in) = $110,250 COGAS

To calculate the Ending Inventory, subtract the Cost of Goods Sold (COGS) from the COGAS:

COGAS - COGS = Ending Inventory

$110,250 (COGAS) - $82,300 (COGS) = $27,950 Ending Inventory

The transportation-out costs, salaries of sales personnel, and administrative expenses are not included in the calculation of COGAS or Ending Inventory, as they are considered operating expenses not directly related to inventory cost.

Answer 2

Costs of goods available for sale is $110,250

ending inventory is $27,950

Step-by-step explanation:

Cost of goods available comprises of the opening stock of inventory plus purchases minus the goods returned as well as purchases discounts plus the cost of transportation in-cost

Costs of goods available=$40,000+$75,000-$5000-$750+$1000=$110,250

ending inventory is calculated as the difference between costs of goods sold and costs of goods available for sale

costs of goods sold is $82,300

costs of goods available is $110,250

ending inventory=$110,250-$82,300=$27,950