Tierney Construction, Inc. recently lost a portion of its financial records in a

Question

Tierney Construction, Inc. recently lost a portion of its financial records in an office theft. The following accounting information remained in the office files:

Direct labor cost incurred during the period amounted to 2.5 times the factory overhead. The CFO of Tierney Construction, Inc. has asked you to recalculate the following accounts and to report to him by the end of tomorrow.

What should be the amount in the finished goods inventory at December 31, 2013?

$55,500.

$35,000.

$43,000.

$49,000.

Cost of goods sold $80,000 Work in process inventory, January 1, 2013 18,500 Work in process inventory, December 31, 2013 14,500 Selling and Administrative Expenses 16,000 Net Income 30,000 Factory overhead 20,000 Direct materials inventory, January 1, 2013 26,000 Direct materials inventory, December 31, 2013 14,000 Cost of goods manufactured 98,000 Finished goods inventory, January 1, 2013 31,000

Explanation / Answer

Answer:$49,000.

Closing Finished goods inventory = Cost of goods manufactured + Finished goods inventory, January 1, 2013 - Cost of goods sold

Closing Finished goods inventory = 98000 + 31000 - 80000 = 49000

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