The following information comes from the records of Telly’s Supply : Beginning i
ID: 2450618 • Letter: T
Question
The following information comes from the records of Telly’s Supply:
Beginning inventory $32,000
Inventory purchases 85,000
Transportation-in 4,300
An inventory count taken at year-end indicates that inventory with a cost of $50,000 is on hand as of December 31, 2014.
Assume that inventory purchases and transportation-in are both reflected in the inventory account, which shows an ending balance of $52,000. Compute cost of goods sold along with any adjusting entries required at the end of the period
Explanation / Answer
Solution:
Cost of Goods Sold = Opening Inventory + (Purchases + Transportatio-in) - Ending Inventory
Opening Inventory = $ 32,000
Purchases = $ 85,000
Transportation - in = $ 4,300
Ending Inventory = $ 52,000
Cost of Goods Sold = $ 69,300
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