Data from Smallwood Company for the year ended December 31 follows:
Sales $800,000
Cost of goods Manufactured $550,000
Finished Goods, Dec 31 $100,000
Gross Profit $300,000

What hat is the beginning balance of Smallwood's finished goods inventory as of January 1?
A) $100,000
B) $50,000
C) $500,000
D) $250,000

Not know

I will not give you the answer
Try to use this formula,

SALES
Minus: Cost of sales
Equals: Gross Profit

Cost of goods sold equals:
Beginning Finished goods
+ Cost of goods manufactured
- Ending Finished goods

Thts a simple question.

Answer is:

B) $50,000

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If the ending Finished Goods Iventory is $100,000 for December 31, then why wouldn't beginning Finished Goods Inventory on January 1st be the same $100,000--its the very next day, I don't get it?

P.S, its not asking for BFGI for Dec.31, but for January 1st unless I'm reading it wrong.

Larrybrich.!

What you want to say ?

I still can't get your point.

- I just mentioned what erick had asked.

Do.. comment.

My point was that if EFGI for Dec.31 is given, and it is $100,000, then BFGI for Jan. 1 is simply the same $100,000--no calculation needed. Unless I'm missing an important factor the computations given really equate to BFGI for Dec.31 and that's was what the questioner was seeking. Heyy this seem to be a great forum and I'm trying to learn like everyone else so your feedback is apreciated.

Larrybrich

Now I understand what do you want to say.

Question is asking about BFGI Jan 1. ( the whole confusion you were getting is for YEAR ! )

- Lets suppose if the year is 1998. Now read the above question again..

Its saying that:
EFGI 31 Jan 1998 is = $100,000
BFGI 01 Jan 1998 is =?

(for this purpose we have to derive the answer by doing above computation. Please follow my above post to get it right.! (Above answer is posted by me.)

If further clarification needed do let me know.

Roll over your profit. Answer is 50k.