Question

Shown here are annual financial data taken from two different companies.
  

	Music World Retail			Wave-Board Manufacturing
Beginning inventory
Merchandise	$	145,000
Finished goods				$	290,000
Cost of purchases		310,000
Cost of goods manufactured					586,000
Ending inventory
Merchandise		120,000
Finished goods					280,000

   
Required:
1. Prepare the cost of goods sold section of the income statement for the year for each company in Merchandising Business and Manufacturing Business.
  

Answer 1

Solution:

Cost of Goods Sold Section of Income Statement for Music World Retail as follows:

Beginnig Inventory for Merchandise	$145,000
Add: Cost of Purchases	$310,000
Goods Available for Sales	$455,000
Less:Ending Inventory for Merchandise	$120,000
Cost of Goods Sold	$335,000

Therefore,Cost of Goods Sold for Music World Retail is $335,000

Cost of Goods Sold Section of Income Statement for Wave-Board Manufacturing is as follows:

Beginning Inventory for finished goods	$290,000
Add: Cost of Goods Manufactured	$586,000
Goods Available for Sales	$876,000
Less:Ending Inventory for Finished Goods	$280,000
Cost of Goods Sold	$596,000

Therefore,Cost of Goods Sold for Wave- Board Manufacturing is $596,000