Final answer:
Merchandise COGS is calculated by adding the beginning inventory and net purchases, then subtracting the ending inventory. The merchandise balance is the sales revenue minus the COGS, while the current account balance considers goods, services, and income payments to calculate the total balance.
Step-by-step explanation:
The merchandise Cost of Goods Sold (COGS) is a financial formula used by merchandisers to calculate the total cost of merchandise sold during a specific period. The formula can be calculated by starting with the beginning inventory for the period, adding the cost of goods purchased or manufactured (net purchases), and subtracting the ending inventory. The formula is as follows:
Merchandise COGS = Beginning Inventory + Net Purchases - Ending Inventory
To calculate the merchandise balance, you would subtract the cost of goods sold from the sales revenue. The current account balance includes the merchandise balance along with other components like services, and income payments, where exports are added and imports are subtracted to determine the total balance.
For a fictional example, if the beginning inventory is $20,000, net purchases amount to $50,000, and the ending inventory is valued at $15,000, the Merchandise COGS would be:
Merchandise COGS = $20,000 + $50,000 - $15,000 = $55,000
This figure would then be used to help calculate the merchandise balance and current account balance.