BES-3 At the beginning of the year, Point Claire Shipping Ltd, a company that ha

Question

BES-3 At the beginning of the year, Point Claire Shipping Ltd, a company that has a perpetual inventory system, b ry $25,000 of merchandise inventory. During the year, inventory costing $100,000 was purchased. Of this, $12,000 returned to the supplier and a 5% discount was taken on the remainder. Freight costs incurred by the company form chandise purchases amounted to $2,400. The cost of goods sold during the year was $93,000. Determine the balance in the Merchandise Inventory account at the end of the year

Explanation / Answer

Amounts in $ Amounts in $ beginning inventory 25000 Add: Purchases 1,00,000 Add: Freight inwards 2400 1,02,400 Less: Purchase returns 12000 Less: Purchase Discounts (100,000-12000)*5% 4400 Net purchases 86,000 86000 Goods Available for sale 111000 Less: cost of goods sold 93000 Ending Inventory 18000

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