Mogul Company ships merchandise to Ski Outfit in a consignment arrangement. The arrangement specifies that Ski Outfit will attempt to sell the merchandise, and in return, Mogul will pay to Ski Outfit a commission of 25% of the selling price on any merchandise sold. During the year, Mogul ships inventory with a cost of $81,000 to Ski Outfit and pays shipping costs of $8,700. By the end of the year, $61,000 of the merchandise has been sold to customers for a total of $86,000. Mogul allocates $6,500 of the shipping costs to inventory sold and the other $2,200 to inventory not sold. Mogul also paid advertising costs during the year of $10,500. What amount of inventory will Mogul report at year end

Respuesta :

Answer:

$22,200

Explanation:

With regards to the above information Mogul company,

Cost of goods

= $81,000 + $8,700

= $89,700

= $61,000 + $6,500

= $67,500

Inventory = Cost of goods - Cost of goods sold

= $89,700 - $67,500

= $22,200

It therefore means that the amount of inventory Magu company will report at the year end is $22,200