Charleston Company purchases $180,000 of inventory during the period and sells $54,000 of it for $90,000. Beginning of the period inventory was $9,000. What is the company’s inventory balance to be reported on its balance sheet at year end? Select one: A. $9,000 B. $6,000 C. $135,000 D. $54,000

Inventory Balance to be reported at year end is C. $135,000

Explanation:

Ending Inventory = Opening Inventory + Purchases - Sales

Calculation of Inventory Balance to be reported at year end

Opening Inventory                           $9,000

Add Purchases of Inventory        $180,000

Less Sales at cost of Inventory    ($54,000)

Ending Inventory                            $135,000

The inventory balance to be reported at the year end is $135000. So option C is the correct answer.

Explanation:

The inventory balance to be reported at the year end is the value of ending inventory. The closing inventory is calculated as follows,

Cost of Goods sold = Opening Inventory + Purchases - Closing Inventory

Adjusting this equation to make Closing inventory the subject,

Closing Inventory = Opening Inventory + Purchases - Cost of Goods Sold

Thus, Closing inventory to be reported at year end will be,

Closing Inventory = 9000 + 180000 - 54000

Closing Inventory = $135000

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