Gotham City acquires $25,000 of inventory on November 1,2007,having held no inventory previously.On December 31,2007,the end of Gotham City's fiscal year,a physical count shows $8,000 still in stock.During 2008,$6,500 of this inventory is used,resulting in a $1,500 remaining balance of supplies on December 31,2008.
-Based on the preceding information,which of the following would be the correct account balances for 2008 if Gotham City used the consumption method of accounting for inventories?

Question

Quizplus · Accepted Answer

Under the consumption method, inventory is expensed as it is used. In 2008, $6,500 of inventory was used, leaving $1,500 in inventory. The correct account balances would reflect the cost of goods used and the remaining inventory.

Gotham City Acquires $25,000 of Inventory on November 1,2007,having Held