Question

Inventory at the beginning of the year cost $13,500. During the year, the company purchased (on account) inventory costing $84,500. Inventory that had cost $80,500 was sold on account for $95,400. At the end of the year, inventory was counted and its cost was determined to be $17,500.

Calculate the costs of goods sold.

Answer 1

Answer:

The costs of goods sold is $80,500

Explanation:

Cost of goods sold is defined as the cost which a company incurs to acquire or manufacture a product and selling it to the customer. The selling price doesnot have any effect on the cost of goods sold. The formula for COGS is,

Cost of goods sold = Beginning inventory + Purchases - Ending inventory

Here,

Beginning Inventory = $13,500

Purchases =  $84,500

Ending inventory = $17,500

COGS = 13,500 + 84,500 - 17,500 = $80,500

Answer 2

Answer:

$80,500

Explanation:

Cost of goods sold is defined as the cost of acquiring the goods sold during a period, and not the price for which goods are sold to the customer. In this problem, it is stated that inventory worth $80,500 was sold. Therefore, the cost of goods sold is $80,500.

Cost of goods sold can also be calculated as the initial inventory added to purchases minus ending inventory:

$COGS =13,500+84,500-17,500\\COGS=\ 80,500$