Bedrock Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:

1. The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Bedrock was the consignor.

2. 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.

3. Based on this information, the correct balance for ending inventory on December 31 is:

A. $412,000

B. $340,000

C. $318,000

D. $362,000

E. $390,000

Question

Business

Makenna

3 October, 17:41

Bedrock Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:

1. The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Bedrock was the consignor.

2. 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.

3. Based on this information, the correct balance for ending inventory on December 31 is:

A. $412,000

B. $340,000

C. $318,000

D. $362,000

E. $390,000

+2

Answers (1)

Know the Answer?

Jamie Holloway · Answer 1

A. $412,000

Explanation:

Consignments ($72,000) are usually owned by the consignor until the consignee sells or uses the goods. Hence the proper treatment is to record the goods as the property of Bedrock company.

Office supplies of $22,000 represents goods to be used in future. Failing to record this stock value without reporting the associated value (revenue) is not be permissible. Since you cannot record a future or expected activity, it is proper to report the stock value of $22,000 as closing inventory.