In: Accounting
Goods available for sale in 2017 by the Eleanor Co. have a cost of $150,000 and a retail price of $250,000. Sales for 2017 amounted to $227,500 and a physical inventory at year-end showed goods actually on hand with a retail price of $22,500. The dollar amount of the inventory to be reported in the balance sheet as of December 31, 2017, is:
A) $13,500
B)$22,500
C)$15,000
D)$25,000
Correct option is: A) $13,500 | |||||
Workings: | |||||
Retail price | Cost | Profit | G.P ratio | ||
(i) | (ii) | (iii) = (i) - (ii) | (iii) / (i) | ||
Goods available for sale | $ 2,50,000 | $ 1,50,000 | $ 1,00,000 | 40% | |
Less: | Goods sold | $ 2,27,500 | $ 1,36,500 | $ 91,000 | 40% |
($227500 X 60%) | ($227500 X 40%) | ||||
Ending Inventory | $ 22,500 | $ 13,500 | |||