Question

The Constance Corporation’s inventory at December 31, 2021, was $134,500 (at cost) based on a physical...

The Constance Corporation’s inventory at December 31, 2021, was $134,500 (at cost) based on a physical count of inventory on hand, before any necessary adjustment for the following:

  • Merchandise costing $24,500, shipped f.o.b. shipping point from a vendor on December 27, 2021, was received by Constance on January 5, 2022.
  • Merchandise costing $54,500 was shipped to a customer f.o.b. shipping point on December 28, 2021, arrived at the customer’s location on January 6, 2022.
  • Merchandise costing $30,500 was being held on hand for Jess Company on consignment.
  • Estimated sales returns are 15% of annual sales. Sales revenue was $569,000 with a gross profit ratio of 20%.


What amount should Constance Corporation report as inventory in its December 31, 2021, balance sheet?

Multiple Choice

A. $196,780.

B. $172,280.

C. $233,405.

D. $226,780.

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Answer #1
Inventory as per physical count 134500
1 24500
2 0
3 -30500
4 68280 =569000*(1-20%)*15%
Inventory on December 31, 2021 196780
Option A $196,780 is correct
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