Question

Baker Fine Foods has beginning inventory for the year of $15,000. During the year, Baker purchases inventory for $130,000 and ends the year with $27,000 of inventory. Baker will report cost of goods sold equal to:

$118,000.
$130,000.
$157,000.
$142,000.

Answer 1

COGS = 118,000

Step-by-step explanation:

From the inventory identity we will solve for COGS

`$$Beginning Inventory + Purchase = Ending Inventory + COGS`

the right side is the origin of the goods, are either purchased or come from prior period

the left side, is the destination, the use of the goods, it could either be sold or is still in stocks.

Now, to sovle, we plug our values and clear for COGS

15,000 + 130,000 = 27,000 + COGS

COGS = 15,000 + 130,000 - 27,000

COGS = 118,000