Base industries lists inventory at $87,500 on the balance sheet. included in this amount is the following: goods that were purchased fob shipping point that were in transit on the balance sheet date: $8,850 good held on consignment for western company: $7,525 goods that were purchased fob destination that were in transit on the balance sheet date: $1,045 what is the correct balance for base industries’ inventory account?

The answer is: $78,930

Explanation:

The merchandise inventory account included a couple of records that are incorrect:

The correct balance of Merchandise Inventory account should be:

$87,500 - $7,525 - $1,045 = $78,930

The correct balance for Base Industries’ inventory account is $78,930

The correct computation for base industries account should be as follows:

Ending inventory balance - FOB destination goods purchased - goods being held on consignment

Therefore we have:

$87,500 - $7,525 - $1,045

= $78,930

Some records should not be included in the merchandise inventory account.

Thus, the correct balance for Base Industries’ inventory account is $78,930

Inventory accounts refer to the aspect of accounting which involves valuing and accounting for items that a company’s plan to sell for profit.

A company’s inventory deals with the goods that are involved in three stages of production and these include

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