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12 November, 09:49

Stone Pine Corporation, a calendar year taxpayer, has ending inventory of $160,000 on December 31, 2018. During the year, the corporation purchased additional inventory of $415,000. If cost of goods sold for 2018 is $470,000, what was the beginning inventory at January 1, 2018?

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  1. 12 November, 13:20
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    The answer is $215,000

    Explanation:

    Cost of goods sold equal:

    Opening/beginning inventory plus purchases minus closing/ending inventory

    To find beginning inventory at January 1, 2018, lets rearrange the formula:

    Cost of goods sold minus plus purchases plus closing/ending inventory.

    Cost of sales is $470,000

    Purchases is $415,000

    Ending inventory is $160,000

    Therefore, beginning inventory at January 1, 2018 is

    $470,000 - $415,000 + $160,000

    =$215,000
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