Question

At the end of the period, a physical inventory count of goods actually in the warehouse showed that West, Inc. had $65,000 of goods on hand.West had $24,000 of goods out on consignment with a customer (West is the consignor) and $17,000 of goods on consignment from a vendor (West is the consignee). West had a purchase order (West is the buyer) for$8,000 of inventory (FOB destination) that was still in transit.Finally, West had sold $6,500 of inventory (FOB destination) that was also still in transit. What is the correct amount of ending inventory that West should record on its books?

	$65,000
	$72,000
	$73,500
	$78,500
	$95,500
	$86,500

Please explain how you reached the amount

Answer 1

Answer: 73500 $

Calculation of Ending Inventory

                                                                                   (Amounts in $)

Goods in Hand                                                               65000 $

Add: Goods out on Consignment with a Customer      24000 $

Purchase (Goods in Transit)                                            8000 $

Less: Sold out of Transit                                              (6500 $)

Goods on Consignment from a vendor                         (17000 $)

Amount of Ending Inventory                                        73500 $