Question

Elm Corporation is a merchandising company. The year began with inventory of $17,000, Purchases for the year were $42,000, and the Ending Inventory was $4,000. What is the Cost of Goods Sold that would be reported on the income statement?

Answer 1

The Cost of Goods Sold (COGS) would be $51,000.

Step-by-step explanation:

The cost of goods sold (COGS) is the expense incurred by a company to produce or purchase the goods it sells. It is calculated by subtracting the ending inventory from the sum of the beginning inventory and purchases. In this case, the beginning inventory is $17,000, purchases are $42,000, and the ending inventory is $4,000.

So, the COGS can be calculated as follows:

COGS = Beginning Inventory + Purchases - Ending Inventory

COGS = $17,000 + $42,000 - $4,000

COGS = $55,000 - $4,000

COGS = $51,000