Question

For the current fiscal year, Purchases were $250,000, Purchase Returns and Allowances were $8,000, Purchase Discounts...

For the current fiscal year, Purchases were $250,000, Purchase Returns and Allowances were $8,000, Purchase Discounts were $2,000 and Freight In was $30,000. If the beginning merchandise inventory was $60,500 and the ending merchandise inventory was $76,000, the Cost of Goods Sold is:

Multiple Choice

A) $270,000

B) $274,500

C) $285,500

D) $254,500

Please show how you obtained the answer. Thank you.

Business   Accounting   
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Homework Answers

Answer #1

Purchases = $250,000

Purchase Returns and Allowance = $8,000

Purchase Discounts = $2,000

Freight = $30,000

Beginning merchandise inventory = $60,500

Ending merchandise inventory = $76,000

Net purchases = Purchases - Purchase Returns and Allowance - Purchase Discounts + Freight

= 250,000 - 8,000 - 2,000 + 3,000

= $270,000

Cost of goods sold = Beginning merchandise inventory + Net purchases - Ending merchandise inventory

= 60,500 + 270,000 - 76,000

= $254,500

Correct option is (D)

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