irect materials purchased (on account) $9,200 Conversion costs incurred 14,600 Number of guitars produced 400 guitars Number of guitars sold (on account, at $575 each) 340 guitars The beginning balance of Finished Goods Inventory was $2,150. Use a T-account to find the ending balance of Finished Goods Inventory.

Question

Kassandra Preston

Business

24 May, 22:58

irect materials purchased (on account) $9,200 Conversion costs incurred 14,600 Number of guitars produced 400 guitars Number of guitars sold (on account, at $575 each) 340 guitars The beginning balance of Finished Goods Inventory was $2,150. Use a T-account to find the ending balance of Finished Goods Inventory.

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Gabriela · Answer 1

The balance at the end of the period is equal to 5,720.

Explanation:

At the beggining, the balance of Finished goods was 2,150. During the period, there were many movements:

Debits: all the direct materials and conversion costs go to the debit of the account (they increases the balance). Total of materials and conversion = 9,200 + 14,600 = 23,800 Guitars produced = 400 Cost per guitar = 23,800/400 = 59,5 Credits: the guitars sold go to the credit of the account (they disminishes the balance) Total of guitars sold = 340. Total of credit = 340 * 59,5 = 20,230 (the value of credit is the same of the cost, the price goes to the sales) Total balance at ending = 2,150 + 23,800 - 20,230 = 5,720