The Kwok Company’s inventory balance on December 31, 2021, was $255,000 (based on a 12/31/2021 physical count) before considering the following transactions: Goods shipped to Kwok f.o.b. destination on December 20, 2021, were received on January 4, 2022. The invoice cost was $48,000. Goods shipped to Kwok f.o.b. shipping point on December 28, 2021, were received on January 5, 2022. The invoice cost was $35,000. Goods shipped from Kwok to a customer f.o.b. destination on December 27, 2021, were received by the customer on January 3, 2022. The sales price was $58,000 and the merchandise cost $40,000. Goods shipped from Kwok to a customer f.o.b. destination on December 26, 2021, were received by the customer on December 30, 2021. The sales price was $38,000 and the merchandise cost $31,000. Goods shipped from Kwok to a customer f.o.b. shipping point on December 28, 2021, were received by the customer on January 4, 2022. The sales price was $43,000 and the merchandise cost $30,000.

Required: Determine the correct inventory amount to be reported in Kwok’s 2021 balance sheet.

The inventory amount on the balance sheet is the ending inventory. In order to calculate this, we require the information of beginning inventory, purchases as well as cost of goods sold. It can be calculated as beginning inventory + purchases - cost of goods sold.

Beginning inventory = $255000

Purchases = $48000 + $35000 = $83000

Cost of goods sold = $40000 + $31000 + 30000 = $101000

Ending inventory = ($255000 + $83000) - $101000 = $237000