Question

Cinnamon Buns Co. (CBC) started 2018 with $52,600 of merchandise on hand. During 2018, $297,000 in merchandise was purchased on account with credit terms of 3/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,400. Merchandise with an invoice amount of $2,100 was returned for credit. Cost of goods sold for the year was $309,000. CBC uses a perpetual inventory system. Assuming CBC uses the gross method to record purchases, ending inventory would be:

Answer 1

$39,053

Step-by-step explanation:

The computation of the ending inventory is shown below:

Beginning inventory $52,600

Add: Inventory purchased $297,000

Add: Freight in $9,400

Less: Merchandise returned -$2,100

Less: Discounts -$8,847 ($297,000 - $2,100) × 3%

Less: Cost of goods sold -$309,000

Ending inventory $39,053

Hence, the ending inventory using the gross method is $39,053