Final answer:
Under a periodic inventory system, the dollar amount of EI is calculated by taking the physical count of the inventory at the end of the accounting period and multiplying it by the unit cost of each item. COGS is then calculated by subtracting EI from the Cost of Goods Available for Sale (COGAS).
Step-by-step explanation:
Under a periodic inventory system, the dollar amount of Ending Inventory (EI) is calculated by taking the physical count of the inventory at the end of the accounting period and multiplying it by the unit cost of each item. The formula to calculate EI is:
EI = Physical count of inventory * Unit cost
Once the dollar amount of EI is determined, the Cost of Goods Sold (COGS) can be calculated by subtracting the EI from the Cost of Goods Available for Sale (COGAS). The formula to calculate COGS is:
COGS = COGAS - EI