For the current fiscal year, Purchases were $270,000, Purchases Returns and Allowances were $4,200 and Freight In was $21,000. If the beginning merchandise inventory was $170,000 and the ending merchandise inventory was $87,000, the Cost of Goods Sold is:
Question
For the current fiscal year, Purchases were 4,200 and Freight In was 170,000 and the ending merchandise inventory was $87,000, the Cost of Goods Sold is:
Solution
To calculate the Cost of Goods Sold (COGS), we need to follow these steps:
Step 1: Calculate Net Purchases Net Purchases = Purchases - Purchases Returns and Allowances Net Purchases = 4,200 Net Purchases = $265,800
Step 2: Calculate Cost of Goods Available for Sale Cost of Goods Available for Sale = Beginning Merchandise Inventory + Net Purchases + Freight In Cost of Goods Available for Sale = 265,800 + 456,800
Step 3: Calculate Cost of Goods Sold Cost of Goods Sold = Cost of Goods Available for Sale - Ending Merchandise Inventory Cost of Goods Sold = 87,000 Cost of Goods Sold = $369,800
Therefore, the Cost of Goods Sold for the current fiscal year is $369,800.
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