The Tse Manufacturing Corporation uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. The company closes any balance in the Manufacturing Overhead account to Cost of Goods Sold. During the year the company's Finished Goods inventory account was debited for $125,000 and credited for $110,000. The ending balance in the Finished Goods inventory account was $28,000. At the end of the year, manufacturing overhead was overapplied by $4,500.The balance in the Finished Goods inventory account at the beginning of the year was:
A) $28,000
B) $13,000
C) $17,500
D) $8,500

Question

Quizplus · Accepted Answer

The beginning balance in the Finished Goods inventory can be calculated by adjusting the ending balance with the amounts debited and credited during the year. The formula is: Beginning balance + Amount debited (purchases) - Amount credited (cost of goods sold) = Ending balance. Plugging in the given values: Beginning balance + $125,000 - $110,000 = $28,000. Solving for the beginning balance gives us $13,000. The overapplied overhead does not directly affect the calculation of the beginning balance of the Finished Goods inventory.

The Tse Manufacturing Corporation Uses a Job-Order Costing System and Applies