Question

Musgrove Basket Company had an $8,500 beginning balance in its Merchandise Inventory account. The following information regarding Musgrove’s purchases and sales of inventory during its 2016 accounting period was drawn from the company’s accounting records:
1. Purchased $45,000 of inventory under terms 1 / 10, net / 60. Transportation costs amounted to $700. The goods were delivered FOB shipping point. Musgrove paid for the inventory within the discount period.
2. Purchased $40,000 of inventory under terms 2 / 10, net / 30. Transportation costs amounted to $900. The goods were delivered to Musgrove FOB destination. Musgrove paid for the inventory after the discount period had expired.
3. Sold inventory that cost $56,000 for $94,000. Transportation costs for goods delivered to customers amounted to $3,200. The goods were delivered FOB destination.
Required
a. Determine the balance in the Inventory account at the end of the accounting period.
b. Is Musgrove or its customers responsible for the transportation costs described in Event 3?
c. Determine the gross margin.


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  • CreatedApril 20, 2015
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