Question

The following information is available for Allsport Company. What amount was paid for merchandise during the current year? (2016)?

Cost of goods sold	$525,000
Merchandise? inventory, 12/31/15	85,000
Merchandise? inventory, 12/31/16	132,000
Accounts? Payable, 12/31/15	100,500
Accounts? Payable, 12/31/16	100,300

A.

$571,800

B.

$525,000

C.

$572,200

D.

$477,800

Liberty, Inc. has the following list of?inventory:

Item	Unit Cost	Selling Price
ELF	$13,287	$20,322
ICF	$6,780	$7,234
CKS	$18,312	$19,823
PCC	$9,384	$11,244
CRD	$ $27,444	$33,449

Under

specific??identification,

What is? Liberty's cost of goods sold if ICF and CRD were not sold during the current? period?

A.

$40,683

B.

$40,983

C.

$34,224

D.

$51,389

Answer 1

Problem 1 --- Allsport Company

First of all we need to calculate the amount of goods purchased during the period.

Cost of Goods Sold = Beginning Inventory + Purchases made during the year – Ending Inventory

$525,000 = 85,000 + Purchases made during the year - $132,000

Purchases made during the year = 525,000 + 132,000 – 85,000

= $572,000

Now, we can calculate the amount paid for merchandise purchases during the current year with the T-Account of Accounts Payable

Accounts Payable
Cash Paid (Bal. fig)	$572,200	Beg. Bal	$100,500
Ending Bal	$100,300	Purchase made during the year	$572,000
	$672,500		$672,500

Cash paid for merchandise purchase during the current year = $572,200

Hence, the correct option is C. $572,200

Problem 2 –

Cost of Goods Sold means the COST (Not sales value) related to the units sold during the period.

Cost of Goods Sold if ICF and CRD were not sold during the current? period = ELF Unit Cost 13,287 + CKS 18,312 + PCC 9,384

= $40,983

The correct option is B. $40,983

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you