Quentin's Balance Sheet
Assets
Current Assets
Cash 42,000
Inventory 36,000
Prepaid Expense 12,000
Total Current Assets 90,000
Non Current Assets
Plant and Equip (net) 56,000
Patents (net) 24,000
Total Assets 170,000

Liabilities
Current Liabilities
Accounts Payable 30,000
Short term debt 42,000
Total current 72,000

Non Current Liab
Bonds Payable 34,000

Owners Equity
Common Stock 20,000
Retained Earnings 44,000

Total Liabilities and Equity 170,000

Quentin's December 31, 2003 inventory T-account debit balance was also $56,000. During
2004, its inventory purchases amounted to $25,000, and there were no inventory-related writedowns
Or losses. What was Quentin's 2004 cost of goods sold expense?
A. $67,000
B. $45,000
C. $5,000
D. $20,000

My answer: I don't think it is any of these answers I thought it would be $31,000 which would be the inventory debit balance minus the inventory purchase amounts. Can someone help here... I think I'm way off thanks!

Quentin started the year with 56 in inventory, then bought 25 during the year. So how much would have to be sold in order to end the year at 36?

Quote:

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Originally Posted by ArcSine

Quentin started the year with 56 in inventory, then bought 25 during the year. So how much would have to be sold in order to end the year at 36?

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He would need to sell $5,000 in order to end the year at $36,000. So my answer would be C: $5,000. Correct?

Have another go at it. Imagine you begin with 56 widgets in your closet. You buy another 25 widgets during the year and add those to what's already in the closet. How many widgets do you have to remove from the closet in order to bring its total down to 36?

Or: 56 + 25 - ___ = 36

Quote:

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Originally Posted by ArcSine

Have another go at it. Imagine you begin with 56 widgets in your closet. You buy another 25 widgets during the year and add those to what's already in the closet. How many widgets do you have to remove from the closet in order to bring its total down to 36?

Or: 56 + 25 - ___ = 36

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Ok, I get the answer now. It's B: $45k. Out of curiosity though where are you getting that 36 number from?

In your opening post the supplied info indicates that the company ended the year with 36,000 in inventory. The formula is simply

Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory

56 + 25 - 45 = 36

Quote:

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Originally Posted by ArcSine

In your opening post the supplied info indicates that the company ended the year with 36,000 in inventory. The formula is simply

Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory

56 + 25 - 45 = 36

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Great, thanks Arcsine. By any chance could you help me with my other posts from today to which people haven't replied? I'd be so grateful!