Question: Toyland wishes to produce quarterly financial statements but it takes

Toyland wishes to produce quarterly financial statements, but it takes a physical count of inventory only at year-end. The following historical data were taken from the 2016 and 2017 accounting records:
At the end of the first quarter of 2018, Toyland’s ledger had the following account balances:
Sales ............... $210,000
Purchases ............ 90,000
Beginning inventory 1/1/2018 .... 32,100
Ending inventory 3/31/2018 ...... 16,000
Based on purchases and sales, the Toyland accountant thinks inventory is low.
Using the information provided, estimate the following for the first quarter of 2018:
a. Cost of goods sold.
b. Ending inventory at March 31.
c. What could explain the difference between actual and estimated inventory?

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  • CreatedApril 20, 2015
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