Cinnamon Buns Co. (CBC) started 2011 with $52,700 of merchandise on hand. During

Question

Cinnamon Buns Co. (CBC) started 2011 with $52,700 of merchandise on hand. During 2011, $286,000 in merchandise was purchased on account with credit terms of 2/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $10,800. Merchandise with an invoice amount of $2,100 was returned for credit. Cost of goods sold for the year was $314,000. CBC uses a perpetual inventory system.

What is cost of goods available for sale, assuming CBC uses the gross method?




a.$341,722.





b.$349,500.





c.$320,122.





d.$347,400.

Explanation / Answer

Rationale
Beginning Inventory........................52,700
Inventory Purchased........................286,000
Freight.......................................10,800
Merchandised Returned....................(2,100)
Discounts[(286,000 - 2,100) * 2%]........(5,678)
Cost of goods available for sale...........341,722

a.$341,722........(answer)

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