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14 May, 10:29

A physical inventory count of MegaCorp has a $50,000 balance before considering the following:

Consigned goods sent to and held by Madison Company: $10,000

Inventory in transit sold FOB destination: $7,500

Inventory in transit purchased FOB destination: $2,500

At what amount should inventory be reported on the balance sheet?

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  1. 14 May, 13:54
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    The amount of inventory reported on balance sheet is $62,500

    Explanation:

    In this question, we are asked to calculate the value at which inventory will be reported on the balance sheet.

    To do this, we can employ a mathematical approach.

    Mathematically;

    Amount of inventory reported in Balance sheet = physical inventory + goods sent on consigned + inventory purchased on fob destination

    From the question, we can identify the following;

    Physical inventory = $50,000

    Goods sent on consigned = $10,000

    Inventory purchased on fob destination = $2,500

    The amount of inventory reported in balance sheet = 50,000 + 10,000 + 2,500 = $62,500
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