Thomas Company provided the following particulars for year 2015: $$\begin{array} { | l | r | }
\hline \text { Cost of Goods Sold (Cost of sales) } & \$ 1,800,000 \
\hline \text { Beginning Merchandise Inventory } & 325,000 \
\hline \text { Ending Merchandise Inventory } & 650,000 \
\hline
\end{array}$$
-Refer to the table above.Calculate the average merchandise inventory held by Thomas Company during the year.

Question

Thomas Company provided the following particulars for year 2015: $$\begin{array} { | l | r | } 
\hline \text { Cost of Goods Sold (Cost of sales) } & \$ 1,800,000 \
\hline \text { Beginning Merchandise Inventory } & 325,000 \
\hline \text { Ending Merchandise Inventory } & 650,000 \
\hline
\end{array}$$
-Refer to the table above.Calculate the average merchandise inventory held by Thomas Company during the year.

Quizplus · Accepted Answer

Average merchandise inventory can be calculated by taking the average of beginning and ending inventory. 
Average inventory = (Beginning Inventory + Ending Inventory) / 2
Average inventory = (325,000 + 650,000) / 2
Average inventory = 975,000 / 2
Average inventory = $487,500
Therefore, the answer is (B) $487,500.

Thomas Company Provided the Following Particulars for Year 2015 -Refer to the Table Above