Question

In: Accounting

Goods available for sale in 2017 by the Eleanor Co. have a cost of $150,000 and...

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

Solutions

Expert Solution

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

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