Question

Monte Vista uses the perpetual inventory system. At the beginning of the quarter, Monte Vista has $41,000 in inventory. During the quarter the company purchases $9,550 of new inventory from a vendor, returned $1,050 of inventory to the vendor, and took advantage of discounts from the vendor of $310. At the end of the quarter the balance in inventory is $32,000. What is the cost of goods sold?

Answer 1

The cost of goods sold for Monte Vista is calculated using the formula for COGS in a perpetual inventory system.

Step-by-step explanation:

To calculate the cost of goods sold (COGS) for Monte Vista, which uses the perpetual inventory system, we use the following formula: COGS = Beginning Inventory + Purchases - Returns + Discounts - Ending Inventory.

Starting with $41,000 in inventory, Monte Vista made purchases amounting to $9,550, returned $1,050 worth of inventory, took advantage of $310 in discounts, and had an ending balance of $32,000 in inventory. The cost of goods sold is calculated as follows: COGS = $41,000 + $9,550 - $1,050 - $310 - $32,000. COGS = $50,550 - $32,000. COGS = $18,550.

Therefore, the cost of goods sold for Monte Vista at the end of the quarter is $18,550. After accounting for beginning inventory, purchases, returns, discounts, and ending inventory, the COGS for the quarter is determined to be $18,550.