. Gotham Company reported a December 31 ending inventory balance of $412,000. The following additional information is also available:
• The ending inventory balance of $412,000 included $72,000 of consigned inventory for which Gotham was the consignor.
• The ending inventory balance of $412,000 included $22,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers during the coming year.
• The ending inventory balance of $412,000 did not include goods costing $48,000 that were purchased by Gotham on December 28 and shipped FOB destination on that date. Gotham did not receive the goods until January 2 of the following year.
• The ending inventory balance of $412,000 included damaged goods at their original cost of $38,000. The net realizable value of the damaged goods was $10,000.
• The ending inventory balance of $412,000 included $43,000 of consigned inventory for which Gotham was the consignee.
Based on this information, the correct balance for ending inventory on December 31 is:
A. $247,000
B. $341,000
C. $362,000
D. $309,000
E. $319,000
E
Start with beginning inventory of $412,000. The information in the first bullet point was handled correctly since inventory should include consigned goods for which the subject company is the consignor. No adjustment. With respect to the second bullet point, inventory should not include office supplies held for use. Subtract $22,000. The information in the third bullet point was handled correctly since inventory should not include goods shipped FOB destination that have not yet been received by the buyer. With respect to the fourth bullet point, damaged goods should not be included in inventory at their original cost if the net realizable value is materially below cost. Subtract $28,000 ($38,000 - $10,000). With respect to the fifth bullet point, inventory should not include the value of consigned inventory for which the subject company is the consignee. Subtract $43,000. Thus, ending inventory should be $412,000 - $22,000 - $28,000 - $43,000 = $319,000.