Northwest Fur Co.started the year with $94,000 of merchandise inventory on hand.During the year,$400,000 in merchandise was purchased on account with credit terms of 1/15,n/45.All discounts were taken.Northwest paid freight-in charges of $7,500.Merchandise with an invoice amount of $5,000 was returned for credit.Cost of goods sold for the year was $380,000.What is ending inventory?

Question

Quizplus · Accepted Answer

Beginning Inventory = $94,000
Purchases = $400,000 - 1% discount = $396,000
Freight-in charges = $7,500
Return = $5,000
Cost of Goods Available for Sale = $94,000 + $396,000 + $7,500 - $5,000 = $492,500
Cost of Goods Sold = $380,000
Ending Inventory = Cost of Goods Available for Sale - Cost of Goods Sold
Ending Inventory = $492,500 - $380,000 = $112,500 (rounded to the nearest dollar) 
Therefore, the answer is B) $112,550.