A retail company had a balance in Inventory of $500,000 on 12/31/2012. During 2012, the company purchased $2,000,000 of new inventory. According to the point-of-sale scanners, the company sold goods costing $2,200,000 during 2012. What was the balance in Inventory on 12/31/2011?
In the Inventory T-account, we have Beginning Balance + Purchases – Cost of Goods Sold = Ending Balance. Filling in what we know: Beginning Balance + $2,000,000 – $2,200,000 = $500,000. So, Beginning Balance = $500,000 + $2,200,000 – $2,000,000 = $700,000.
