Ending Inventory problem: Beginning Inventory 40,000; Purchases 60,000; CoGS 50,000; Ending Inventory equals?

Ending Inventory problem: Beginning Inventory 40,000; Purchases 60,000; CoGS 50,000; Ending Inventory equals?

• A. 50,000
• B. 60,000
• C. 40,000
• D. 70,000

Answer: (A)

Ending inventory is found by balancing how much you had to start with, plus what you bought, minus what you charged to cost of goods sold. So, ending inventory = beginning inventory + purchases − cost of goods sold. Here that’s 40,000 + 60,000 − 50,000 = 50,000. The remaining balance after deducting the cost of goods sold from the goods available for sale should be 50,000, which matches the given numbers. If ending inventory were 60,000, it would imply a cost of goods sold of 40,000, which doesn’t fit the provided 50,000; similarly, ending at 40,000 would imply 60,000 for cost of goods sold, and ending at 70,000 would imply 30,000 cost of goods sold.

Ending inventory is found by balancing how much you had to start with, plus what you bought, minus what you charged to cost of goods sold. So, ending inventory = beginning inventory + purchases − cost of goods sold. Here that’s 40,000 + 60,000 − 50,000 = 50,000. The remaining balance after deducting the cost of goods sold from the goods available for sale should be 50,000, which matches the given numbers. If ending inventory were 60,000, it would imply a cost of goods sold of 40,000, which doesn’t fit the provided 50,000; similarly, ending at 40,000 would imply 60,000 for cost of goods sold, and ending at 70,000 would imply 30,000 cost of goods sold.