Question

Askew Company uses a periodic inventory system. The June 30, 2021, year-end trial balance for Askew company contained the following information:

Account Debit Credit
Inventory, 7/1/2020 32,000
Sales revenue 380,000
Sales returns 12,000
Purchases 240,000
Purchase discounts 6,000
Purchase returns 10,000
Freight-in 17,000

In addition, you determine that the June 30, 2021, inventory balance is $40,000.
Required:
Calculate the cost of goods sold for the Askew Company for the year ending June 30, 2021.

Answer 1

$233,000

Step-by-step explanation:

As we know that

Cost of goods sold = Beginning inventory + net purchase - ending inventory

where,

Beginning inventory = $32,000

Net purchase is

= Purchase - purchase discounts - purchase returns + freight in

= $240,000 - $6,000 - $10,000 + $17,000

= $241,000

And, the ending inventory is $40,000

So, the cost of goods sold is

= $32,000 + $241,000 - $40,000

= $233,000

We simply applied the above formula so that the cost of goods sold could come