5.Cinnamon Buns Co. (CBC) started 2018 with $52,000 of merchandise on hand. Duri

Question

5.Cinnamon Buns Co. (CBC) started 2018 with $52,000 of merchandise on hand. During 2018, $280,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system. Assuming CBC uses the gross method to record purchases what would be the ending inventory?

Explanation / Answer

Opening value of goods = 52000

Purchased during the year = 280000

Freight Charges = 9000

Less: Goods returned = 4000

Less: COGS = 316000

Inventory at the end = 21000

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