Question

Monte Vista uses the perpetual inventory system. At the beginning of the quarter, Monte Vista has $37,000 in inventory. During the quarter the company purchases $8,950 of new inventory from a vendor, returned $1,400 of inventory to the vendor, and took advantage of discounts from the vendor of $270. At the end of the quarter the balance in inventory is $30,000. What is the cost of goods sold?

Jackson Manufacturing Company had a beginning inventory of $18,000. During the year, the company recorded inventory purchases of $75,000 and cost of goods sold of $56,000. The ending inventory must equal:

Answer 1

Solution:

Question:1

Cost Of Goods Sold = Beginning Inventory + [Purchases-Purchase Returns - Purchase Discount] - Ending Inventory

Cost Of Goods Sold = $ 37,000 + [ $ 8,950 - $ 1,400 - $ 270 ] - $30,000

Cost Of Goods Sold = $ 14,280

Notes:

1) Under  perpetual inventory system, purchase returns and purchase discount will reduce from inventory balance.

Question:2

Ending Inventory = Beginning Inventory + Purchases  - Cost Of Goods Sold

Ending Inventory = $18,000 + $ 75,000 - $ 56,000

Ending Inventory = $ 37,000