Question

Acme Company Balance Sheet As of January 5, 2018 (amounts in thousands) Cash 14,300 Accounts Payable 1,900 Accounts Receivable 4,100 Debt 3,200 Inventory 5,800 Other Liabilities 4,000 Property Plant & Equipment 14,800 Total Liabilities 9,100 Other Assets 700 Paid-In Capital 7,700 Retained Earnings 22,900 Total Equity 30,600 Total Assets 39,700 Total Liabilities & Equity 39,700 Update the balance sheet above to reflect the transactions below, which occur on January 6, 2018 1. Purchase equipment for $50,000 in cash 2. Borrow $67,000 from a bank 3. Issue $80,000 in stock 4. Buy $16,000 worth of manufacturing supplies on credit What is the final amount in Inventory? Please specify your answer in the same units as the balance sheet.

Answer 1

                                                                                                                                   Amounts in Thousands

There maybe two possible answers depending upon assumptions.

First Assumption- Manufacturing Supplies are part of Inventory

Answer

Final Amount in Inventory= $21,800

Inventory on 5 Jan plus Manufacturing supplies purchased

($5,800+$16,000)=$21,800

Second Assumption – manufacturing Supplies treated as other current assets instead of being part of inventory.

Answer

Final amount in Inventory = $5,800

None of the transactions from 1-4 affects the balance of inventory and balance of Inventory on January 5 would be the final balance of inventory on 6^th January.