Final answer:
To compute the cost of goods sold for the year, you need to use the cost of goods manufactured. The cost of goods sold is the total cost of producing or purchasing the goods that were sold during the year.
Step-by-step explanation:
To compute the cost of goods sold for the year ended December 31, you need to use the cost of goods manufactured. The cost of goods sold is the total cost of producing or purchasing the goods that were sold during the year. It includes the cost of materials, direct labor, and manufacturing overhead.
You can calculate the cost of goods sold using the following formula:
Cost of Goods Sold = Opening Inventory + Cost of Goods Manufactured - Closing Inventory
Opening inventory is the value of inventory at the beginning of the year, while closing inventory is the value of inventory at the end of the year.
For example, if the cost of goods manufactured is $500,000, the opening inventory is $100,000, and the closing inventory is $50,000, the cost of goods sold can be calculated as:
Cost of Goods Sold = $100,000 + $500,000 - $50,000 = $550,000