For each of the following cases determine the ending balance in the inventory account. (hint: first, determine the total cost of inventory available for sale. next, subtract the cost of the inventory sold to arrive at the ending balance.)a. jill’s dress shop had a beginning balance in its inventory account of $40,000. during the accounting period jill’s purchased $75,000 of inventory, returned $5,000 of inventory, and obtained $750 of purchases discounts. jill’s incurred $1,000 of transportation-in cost and $600 of transportation-out cost. salaries of sales personnel amounted to $31,000. administrative expenses amounted to $35,600. cost of goods sold amounted to $82,300.b. ken’s bait shop had a beginning balance in its inventory account of $8,000. during the accounting period ken’s purchased $36,900 of inventory, obtained $1,200 of purchases allowances, and received $360 of purchases discounts. sales discounts amounted to $640. ken’s incurred $900 of transportation-in cost and $260 of transportation-out cost. selling and administrative cost amounted to $12,300. cost of goods sold amounted to $33,900.a& b. cost of goods avaliable for sale? ending inventory?

The ending balance in the inventory account is $37,960

Explanation:

For computing the ending balance, first we have to compute the cost of inventory which is available for sale

So, the cost of inventory which is available for sale equals to

=  Beginning balance of inventory + purchased - purchase return - purchase discount + in transportation cost

= $45,500 + $91,500 - $6,100 - $860 + $1,220

= $131,260

Now the ending inventory would be

= Cost of inventory which is available for sale -  Cost of goods sold

= $131,260 - $93,300

= $37,960

a) 49,790‬

b) 29,300

Explanation:

We must understand that we should capitalize all the cost needed to get the inventory ready to sale.

the return and discount decrease the inventory

the freight-out are cost for selling goods not purchase.

   Inventory

Debit      Credit

52,000

111,000

              7,400

                990

1,480                

156,090‬

           106,300

49,790‬

   Inventory

Debit      Credit

12,800

56,100

               1,680

                 600

1,380                

68,000

            38,700

29,300

a. $46,150

b. $26,140

Explanation:

The computation is shown below:

a. Beginning inventory $50,000

Add: Purchase made during the year$105,000

Less: Purchase return($7,000)

Less: Purchase discount($950)

Add: Inward transportation cost  $1,400

Less: Cost of goods sold($102,300)

Ending inventory$46,150

b. Beginning inventory $12,000

Add: Purchase made during the year$52,900

Less: Purchase allowance($1,600)

Less: Purchase discount($560)

Add: Inward transportation cost  $1,300

Less: Cost of goods sold($37,900)

Ending inventory$26,140

We simply applied the above calculations so that the correct amount of ending inventory could come

Explanation:

A. Jill’s Dress Shop

Beginning bal = $40,000

Purchases = $75,000

Returned goods= $5,000

Discount = $750

In cost transport = $1,000

To calculate cost of goods available for sale = $40,000 + $75,000 - $5000 - $750 + $1000 = $110,250

Ending inventory = cost of goods available for sale less cost of goods sold = $110,250 - $82,300= $27,950

b. Ken’s Bait Shop

Beginning bal = $8,000

Purchases = $36,900

Purchases allowance = $1,200

Discount = $360

In cost transport = $900

To calculate cost of goods available for sale = $8,000 + $36,900 - $1,200 - $360+ $900 = $44,240

Ending inventory = cost of goods available for sale less cost of goods sold = $44,240 - $33,900 = $10,340

Jill's Dress Shop:

Ending Inventory        27,950

Ken's Bait Shop:

Ending Inventory        10,340

Explanation:

Jill's Dress Shop:

Beginning                  40,000

Purchases                  75,000

Returned                     (5,000)

Discounts                       (750)

Freight-In                      1,000

Cost of Goods Sold  (82,300)  

Ending Inventory        27,950

Ken's Bait Shop

Beginning                    8,000

Purchases                  36,900

Allowances                  (1,200)

Discounts                       (360)

Freight-In                         900

Cost of Goods Sold  (33,900)  

Ending Inventory        10,340

The freight-out and sales discount have an impact in net sales and selling expenses they do not constitute part of the inventory as are relatedto the sale of the goods rather than acquisition.

a) Beginning Inventory = $40,000

Purchases                     = $75,000

Purchases Return         = ($5,000)

Purchases Discounts    =    ($750)

Freight-in                     =     $1,000

Cost of Goods Available$110,250

less cost of goods sold ($82,300)

Ending Inventory           $27,950

b) Beginning Inventory =    $8,000

Purchases                     =  $36,900

Purchases Return         =   ($1,200)

Purchases Discounts    =     ($360)

Freight-in                     =        $900

Cost of Goods Available $44,240

less cost of goods sold ($33,900)

Ending Inventory          $10,340

Explanation:

a) Ending inventory represents the value of goods available for sale and held by a company at the end of an accounting period.   It is calculated as follows:  Beginning Inventory + Net Purchases - Cost of Goods Sold (or COGS) = Ending Inventory.  The value of goods available for sale at the end of the accounting period is important in reporting the financial status of any trading or producing company.

b) The cost of goods available for sale includes the beginning inventory, the net purchases of inventory, and the freight-in during the period.