Better Brands Corporation,a calendar year taxpayer,has ending inventory of $180,000 on December 31,2011.During the year,the corporation purchased additional inventory of $670,000.If cost of goods sold for 2011 is $615,000,what was the beginning inventory at January 1,2011?

Question

Quizplus · Accepted Answer

Beginning inventory can be calculated using the equation: 
Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory 
Substituting the given values: 
Beginning Inventory + $670,000 - $615,000 = $180,000

Solving for Beginning Inventory: 
Beginning Inventory = $125,000

Therefore, the answer is choice C, $125,000.

Better Brands Corporation,a Calendar Year Taxpayer,has Ending Inventory of $180,000