Final answer:
The cost of goods sold (COGS) for Sheridan Company in 2017 was $1,792,000 (Option B). This is calculated by taking the sum of the beginning finished goods inventory and the cost of goods manufactured, and then subtracting the ending finished goods inventory.
Step-by-step explanation:
To calculate Sheridan Company's cost of goods sold (COGS) for the year 2017, we must first consider the inventory equations and the cost of goods manufactured.
The key formula to apply here is:
Beginning Inventory + Purchases + Production Costs - Ending Inventory = COGS. Let's break down the components further:
- Beginning Inventory (at the start of 2017) consists of raw materials ($80,000), work in progress ($104,000), and finished goods ($100,000).
- Purchases and Production Costs during 2017 include raw material purchases ($1,370,000), direct labor costs ($250,000), and manufacturing overhead ($160,000).
- Ending Inventory (at the end of 2017) includes raw materials ($64,000), work in progress ($116,000), and finished goods ($92,000).
- We also know that Sheridan's cost of goods manufactured for 2017 is $1,784,000.
Using these figures, we can calculate the cost of goods sold
COGS = (Beginning Finished Goods Inventory + Cost of Goods Manufactured) - Ending Finished Goods Inventory
COGS = ($100,000 + $1,784,000) - $92,000
COGS = $1,792,000
Therefore, the Sheridan Company would report a cost of goods sold of $1,792,000 for the year 2017.
Hence, the correct answer is Option B. $1792000.