Question

A company has beginning inventory for the year of $14,000. During the year, the company purchases inventory for $140,000 and ends the year with $25,000 of inventory. The company will report cost of goods sold equal to a. $165,000 b.$140,000 c.$151,000 d.$129,000.

Answer 1

The company's Cost of Goods Sold (COGS) for the year is calculated using the formula: Beginning Inventory + Purchases - Ending Inventory. By plugging in the given values ($14,000 beginning inventory, $140,000 purchases, $25,000 ending inventory), the COGS equals $129,000.

The correct option is Option d.

Step-by-step explanation:

The question involves calculating the Cost of Goods Sold (COGS), which is a measure that reflects the direct costs attributable to the production of the goods sold by a company. To calculate COGS, the formula used is: Beginning Inventory + Purchases - Ending Inventory. In this case, the company has a beginning inventory of $14,000, adds inventory purchases of $140,000, and ends with an inventory of $25,000.

Applying the formula, we get:

Beginning Inventory: $14,000

Purchases: + $140,000

Ending Inventory: - $25,000

COGS: = $14,000 + $140,000 - $25,000

COGS: = $129,000

Therefore, the company will report a Cost of Goods Sold equal to $129,000, which corresponds to option d.