Northwest fur co. started the year with $94,000 of merchandise inventory on hand. during the year, $415,000 in merchandise was purchased on account with credit terms of 1/15, n/45. all discounts were taken. northwest paid freight-in charges of $8,000. merchandise with an invoice amount of $4,700 was returned for credit. cost of goods sold for the year was $373,000. what is ending inventory?

The answer is: The ending inventory is $135,197

Explanation:

(($415,000 (purchase price) - $4,700 (returned merchandise)) x 99%) + $8,000 (freight charges) = ($410,300 x 99%) + $8,000 = $406,197 + $8,000 = $414,197

To calculate the ending inventory we can use the following formula:

Ending inventory = initial inventory + purchased merchandise - COGS

Ending inventory = $94,000 + $414,197 - $373,000 = $135,197

answer/// equals both average variable cost and average total cost at their respective minimums;

answer/// there is an inverse relationship between price and quantity demanded;