Question

Super Tread Inc. is a large manufacturer of auto tires. Super Tread has provided the following​ information:

Sales Revenue	$55,000
Beginning Finished Goods Inventory	20,000
Cost of Goods Sold	33,000
Cost of Goods Manufactured	40,000

Calculate the amount of ending Finished Goods Inventory reported on Super​ Tread's balance sheet.

A.

$60,00

B.

$7,000

C.

$27,000

D.

$15,000

Answer 1

Solution:
	Answer is C. $27,000
Working Notes:
Notes:	To get Ending Finished goods inventory which will be reported in balance sheet, by using formula of cost of goods sold as below:
For trading company	Cost of goods sold = Opening Inventory + Purchases - Closing Inventory
But for Manufacturing company	Cost of goods sold = Beginning finished goods Inventory + cost of goods manufactured - Ending finished goods Inventory
Now
	Cost of goods sold = Beginning finished goods Inventory + cost of goods manufactured - Ending finished goods Inventory
	33,000 = 20,000 + 40,000 - Ending finished goods Inventory
	Ending Finished goods inventory = 20,000 + 40,000 -33,000
	Ending Finished goods inventory = $27,000
Alternatively
	Super Tread Inc
	Partial Income Statement
A	Beginning Finished goods inventory		20,000
B	Add: Cost of goods manufactured		40,000
C=A+B	Goods available for sale		60,000
D=C-E	Less: Ending Finished goods inventory   (Balancing figure)		27,000
	[60,000-33,000]
E	Cost of goods Sold		33,000
Please feel free to ask if anything about above solution in comment section of the question.