Buffalo Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:
• ^The^ending^inventory^balance^of^$412,000^did^not^include^goods^costing^$48,000^that^werepurchased by Buffalo on December 28 and shipped FOB destination on that date. Buffalo did not receive the goods until January 2 of the following year.
• ^The^ending^inventory^balance^of^$412,000^included^damaged^goods^at^their^original^cost^of
$38,000. The net realizable value of the damaged goods was $10,000.
Based on this information, the correct balance for ending inventory on December 31 is:

Question

Quizplus · Accepted Answer

The correct balance for ending inventory on December 31 can be calculated as follows:

Beginning inventory balance = $412,000 
Add: Cost of goods purchased on Dec. 28 = $48,000 
Subtract: Damaged goods at original cost = $38,000 
Subtract: Net loss from damaged goods = $28,000 ($38,000 - $10,000)

Ending inventory balance = $412,000 + $48,000 - $38,000 - $28,000 = $384,000

Therefore, the correct answer is D.

Buffalo Company Reported a December 31 Ending Inventory Balance of $412,000