Question

Based on the following,calculate Cost of Goods Sold. (You must show and label your work for credit.)

Advertising Expense	$25,000
Cost of Goods Manufactured	$200,000
Finished Goods Inventory, 1/1/2019	$152,000
Finished Goods Inventory, 12/31/2019	$166,000
Work-in-Process Inventory, 1/1/2019	$71,000
Work-in-Process Inventory, 12/31/2019	$92,000

Answer 1

Cost of Goods Sold = Beginning Inventory of Finished Goods + Cost of Goods Manufactured - Ending Inventory of Finished Goods

Beginning Inventory of Finished Goods	$ 152,000
Add: Cost of Goods Manufactured	$ 200,000
Less: Ending Inventory of Finished goods	$ (166,000)
Cost of Goods Sold	$ 186,000

The cost of goods sold is $ 186,000

Notes:

Advertisement expense is not a directly attributable expense to the inventory. Hence it is not considered while calculating the cost of goods manufactured or cost of goods sold.

Cost of Goods manufactured = Beginning Inventory of Work in Progress + Total Manufacturing Cost - Ending Inventory of Work in Progress