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Components of Inventory Correct Balance

Gotham 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 included $72,000 of consigned inventory for which Gotham was the consignor.

The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year.

The ending inventory balance of $412,000 did not include goods costing $48,000 that were purchased by Gotham on December 28 and shipped FOB destination on that date. Gotham 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.

The ending inventory balance of $412,000 included $43,000 of consigned inventory for which Gotham was the consignee. Based on this information, the correct balance for ending inventory on December 31 is:

$247,000
$341,000
$362,000
$319,000

Solution Preview

Goods in possession of a consignee belong to the consignor until they are sold, so the $72,000 of consigned inventory is correctly included in Gotham's inventory but the $43,000 for which it is a consignee are not. ...

Solution Summary

Given a list of items, this solution discusses whether each should be included or excluded from the year-end inventory amount.

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