Smith Company purchases $60,000 of inventory during the period and sells $18,000 of it for $30,000. Beginning of the period inventory was $3,000. What is the company's inventory balance to be reported on its balance sheet at year end?

Question

Quizplus · Accepted Answer

The company's ending inventory is calculated as beginning inventory plus purchases minus cost of goods sold (COGS). Beginning inventory is $3,000, purchases are $60,000, and COGS is $18,000 (the amount of inventory sold). Thus, ending inventory is $3,000 + $60,000 - $18,000 = $45,000.

Smith Company Purchases $60,000 of Inventory During the Period and Sells