Esther Baskets Company expects to manufacture and sell 20,000 baskets in 2016 for $5 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 5,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 2016 budgeted income statement?

Question

Kaleb Buck

Business

16 October, 02:05

Esther Baskets Company expects to manufacture and sell 20,000 baskets in 2016 for $5 each. There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 5,000 baskets. The company keeps no work-in-process inventory. What amount of sales revenue will be reported on the 2016 budgeted income statement?

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Answers (1)

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Conor Riddle · Answer 1

19,000 baskets

Explanation:

The sales during the period is made from the stock available for sale, the residual inventory is know as ending Inventory for the year. Stock available for sale is the sum of opening Inventory and production/purchases for the year. The Sold baskets can be calculated by using the formula of ending inventory as follow.

Ending Inventory = Beginning Inventory + Production for the year - Sales for the year

Placing Values in the formula

5,000 = 4,000 + 20,000 - Sales for the year

5,000 = 24,000 - Sales for the year

Sales for the year = $24,000 - $5,000 = 19,000 baskets