Asked by Brayan Checo Rosario on Jun 06, 2024
Verified
Carp Corporation has provided the following information for its most recent month of operation: sales $16,000;ending inventory $4,000,purchases $8,000 and gross profit $10,000.How much was Carp's beginning inventory?
A) $2,000.
B) $18,000.
C) $6,000.
D) $12,000.
Gross Profit
The difference between revenue and the cost of goods sold (COGS), indicating the profit made from sales before deducting operating expenses.
Beginning Inventory
The initial value of goods available for sale at the start of an accounting period.
Purchases
The acquisition of goods or services by a company in exchange for money.
- Analyze the impact of inventory valuation methods on financial reporting.
Verified Answer
AA
Ayomide AkinfolarinJun 08, 2024
Final Answer :
A
Explanation :
The beginning inventory can be calculated using the formula: Beginning Inventory = Ending Inventory + Cost of Goods Sold (COGS) - Purchases. Given that Gross Profit = Sales - COGS, we can rearrange to find COGS = Sales - Gross Profit = $16,000 - $10,000 = $6,000. Therefore, Beginning Inventory = $4,000 + $6,000 - $8,000 = $2,000.
Learning Objectives
- Analyze the impact of inventory valuation methods on financial reporting.
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