Ho Designs experienced the following events during 2016, its first year of operation: 1. Started the business
Question:
1. Started the business when it acquired $70,000 cash from the issue of common stock.
2. Paid $41,000 cash to purchase inventory.
3. Sold inventory costing $37,500 for $56,200 cash.
4. Physically counted inventory; had inventory of $3,200 on hand at the end of the accounting period.
Required
a. Open appropriate ledger T-accounts, and record the events in the accounts.
b. Prepare an income statement and balance sheet.
c. If all purchases and sales of merchandise are reflected as increases or decreases to the
Merchandise Inventory account, why is it necessary for management to even bothered to take a physical count of goods on hand (ending inventory) at the end of the year?
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
Question Posted: