Question

Use the following data to calculate the cost of merchandise sold:

Sales: $80,000
Beginning inventory: $5,000
Purchase: $21,800
Purchase discounts: $790
Ending inventory: $5,100

A. $21,650
B. $20,190
C. $21,560
D. $20,910

Answer 1

Beg Inv + Purchases - Discounts - COGS = End Inv,
or 5,000 + 21,800 - 790 - 5,100 = COGS of 20,910

Answer 2

Cost of merchandise sold is $20,910

Explanation:

To get the cost of merchandising we use the following data:

Beginning inventory: $5,000

Purchase: $21,800

Purchase discounts: $790

Ending inventory: $5,100

Sales are not included when we calculate the cost.

Cost =Beginning inventory+Purchase-discounts-Ending inventory=

Cost=$5,000 +$21,800 -$790-$5,100=$20,910