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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.

\$2.19