Question

The trial balance of Larkspur, Inc. at the end of its fiscal year, August 31, 2020, includes these accounts: Inventory $19,500; Purchases $155,500; Sales Revenue $193,000; Freight-In $4,000; Sales Returns and Allowances $3,350; Freight-Out $1,750; and Purchase Returns and Allowances $2,600. The ending inventory is $24,500. Prepare a cost of goods sold section for the year ending August 31 (periodic inventory).

Answer 1

Explanation:

The preparation of the cost of goods section for the year august 31 is presented below:

Beginning inventory                                             $19,500 (A)

Purchase           $155,500

Less: Purchase return

And allowances        -$2,600

Net purchase            $152,900          

Add: freight in           $4,000

Cost of goods purchased                                    $156,900 (B)

Cost of goods available                                       $176,400 (A + B)

Less: ending inventory                                         $24,500

Cost of goods sold                                                $151,900