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Mare Co.’s December 31 balance sheet reported the following current assets:
Cash $ 70,000
Accounts receivable 120,000
Inventories 60,000
Total $ 250,000
An analysis of the accounts disclosed that accounts receivable consisted of the following:
Trade accounts $ 96,000
Allowance for uncollectible accounts (2,000)
Selling price of Mare’s unsold goods out on consignment, at 130%
of cost, not included in Mare’s ending inventory 26,000
Total $ 120,000
Selling price of Mare’s unsold goods out on consignment, at 130%
At December 31, the total of Mare’s current assets is:
a. $230,000
b. $224,000
c. $244,000 ANSWER
d. $270,000
I’m not understanding why I would subtract $26k from $120k of A/R. I understand that I would add 20k back to inventories because that COGS, correct?
Any help is appreciated. Thanks!
REG - 70, 72, retake at end of Nov.
BEC - PASS
FAR - 10/20/2015
AUD - PASS
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