Mayflower,Inc.provided the following for 2017: $$\begin{array} { | l | r | }
\hline \text { Cost of Goods Sold (Cost of sales) } & \$ 1,100,000 \
\hline \text { Beginning Merchandise Inventory } & 300,000 \
\hline \text { Ending Merchandise Inventory } & 630,000 \
\hline
\end{array}$$ Calculate the average merchandise inventory held by Thomas,Inc.during the year.

Question

Mayflower,Inc.provided the following for 2017: $$\begin{array} { | l | r | } 
\hline \text { Cost of Goods Sold (Cost of sales) } & \$ 1,100,000 \
\hline \text { Beginning Merchandise Inventory } & 300,000 \
\hline \text { Ending Merchandise Inventory } & 630,000 \
\hline
\end{array}$$ Calculate the average merchandise inventory held by Thomas,Inc.during the year.

Quizplus · Accepted Answer

The average merchandise inventory can be calculated by adding the beginning and ending inventory for the year and dividing by 2. However, there is no information given for the beginning inventory. Therefore, we can assume that the beginning and ending inventory are equal.
Ending inventory: $600,000
Beginning inventory: unknown
Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = (Ending inventory x 2) / 2
Average inventory = Ending inventory
Therefore, the average inventory for the year is $600,000. Dividing this by 2 gives us $300,000, which is the correct answer.

Mayflower,Inc Calculate the Average Merchandise Inventory Held by Thomas,Inc