Question

Homestead Crafts, a distributor of handmade gifts, operates out of owner Emma Finn’s house. At the end of the current period, Emma looks over her inventory and finds that she has 700 units (products) in her basement, 29 of which were damaged by water and cannot be sold. 100 units in her van, ready to deliver per a customer order, terms FOB destination. 100 units out on consignment to a friend who owns a retail store. How many units should Emma include in her company’s period-end inventory?

Answer 1

Answer: 871 units

Explanation: Ending inventory is the amount of inventory a company hazs at the end of a specific period, generally at the end of the year.

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The number of units in ending inventory can be calculated using following formula :-

Ending inventory = Inventory in hand + inventory ready for sale + invnetory sent on consignment - damaged units

Ending inventory = 700 + 100 + 100 - 29

                            = 871 units