Question

Audio Corporation purchased $20,000 of DVDs during the current year. The company had DVD inventory of $15,000 at the beginning of the year. An end of the year audit revealed that the company had DVD inventory of $10,000. The amount that would be reported as cost of goods sold in the income statement for the current year is ________.

Answer 1

$25,000

Step-by-step explanation:

Had no goods been sold, the value of the inventory would have gone from $15,000 to $15,000+20,000 = $35,000.

Since the end-of-year inventory was valued at $10,000, apparently $25,000 can be reported as the cost of goods sold.