Question

"Use the following data, what is the cost of goods sold for a company using the periodic inventory method?

Beginning inventory $ 65,000
Ending inventory $ 55,000
Purchases $ 112,000
Purchase discounts $ 1,120
Purchase returns & allowances $ 2,500"

Answer 1

The cost of goods sold for a company using the periodic inventory method, given the provided data, is $118,380. This is calculated by adding beginning inventory to purchases, then subtracting purchase discounts, purchase returns, and allowances, and ending inventory.

Step-by-step explanation:

To calculate the cost of goods sold (COGS) for a company using the periodic inventory method, you need to take into account the beginning inventory, purchases, purchase discounts, purchase returns and allowances, and ending inventory. The formula for COGS is as follows:

COGS = Beginning Inventory + Purchases; Purchase Discounts; Purchase Returns and Allowances; Ending Inventory

Using the data provided:

• Beginning Inventory = $65,000
• Purchases = $112,000
• Purchase Discounts = $1,120
• Purchase Returns and Allowances = $2,500
• Ending Inventory = $55,000

We calculate COGS like this:

COGS = $65,000 + $112,000 - $1,120 - $2,500 - $55,000

COGS = $118,380

Thus, the cost of goods sold for the company, using the periodic inventory method, is $118,380.

Note that this calculation does not factor in any additional costs such as freight-in, which might be included in other scenarios. It's also essential to ensure that all figures used are consistent, for example, by not mixing different currencies or accounting periods.