Question

Use the following data to calculate cost of goods sold for a company using the period inventory method. Beginning inventory $ 65,000 Ending inventory $ 55,000 Purchases $ 112,000 Purchase discounts $ 1,120 Purchase returns & allowances $ 2,500 Select one:

a. $4,380
b. $53,380
C. $118,380
d. $123,380

Answer 1

The cost of goods sold (COGS) for the company using the periodic inventory method is calculated by adding beginning inventory and adjusted purchases, then subtracting ending inventory, which leads to the correct answer of C. $118,380.

Step-by-step explanation:

To calculate the cost of goods sold (COGS) for a company using the periodic inventory method, we follow these steps:

1. Begin with the beginning inventory value.
2. Add the total amount of purchases made during the period.
3. Subtract any purchase discounts and purchase returns & allowances from the purchases.
4. Finally, subtract the ending inventory from the adjusted purchases and beginning inventory sum to get the COGS.

Applying these steps, we have:

• Beginning Inventory: $65,000
• Purchases: $112,000
• Purchase Discounts: -$1,120
• Purchase Returns & Allowances: -$2,500
• Ending Inventory: $55,000

Adjusted Purchases = Purchases - Purchase Discounts - Purchase Returns & Allowances = $112,000 - $1,120 - $2,500 = $108,380.

Now, add the beginning inventory and subtract the ending inventory:

COGS = Beginning Inventory + Adjusted Purchases - Ending Inventory = $65,000 + $108,380 - $55,000 = $118,380.

Therefore, the correct answer is C. $118,380.