Jackson Manufacturing Company had a beginning inventory of $30,000. During the year, the company recorded inventory purchases of $90,000 and cost of goods sold of $100,000. The ending inventory must equal:

The answer is $20,000

Explanation:

Solution

Given that:

Jackson Manufacturing Beginning inventory = 30,000

Inventory purchases recorded = $90,000

Cost of goods sold = $100,000

Then

We find the ending inventory which is given below:

Now

The inventory (ending) is = beginning inventory + purchases - cost of goods sold

= $30,000 + $90,000 - $100,000

=$20,000

Hence, the ending inventory must equal the amount of $20,000