Question

hown here are annual financial data at December 31, 2017, taken from two different companies. Music World Retail Wave-Board Manufacturing Beginning inventory Merchandise $ 200,000 Finished goods $ 500,000 Cost of purchases 300,000 Cost of goods manufactured 875,000 Ending inventory Merchandise 175,000 Finished goods 225,000 Required: 1. Prepare the cost of goods sold section of the income statement at December 31, 2017, for each company in Merchandising Business and Manufacturing Business.

Answer 1

Answer and Explanation:

As per the data given in the question,

a)

Music World Retail

Partial Income Statement

For year ended Dec-31,2017

Cost of goods sold :

Beginning merchandise inventory $200,000

Add: Cost of purchase $300,000

Goods available for sale $500,000

Less: Ending merchandise inventory $175,000

Cost of goods sold $325,000

b)

Wave Board Manufacturing

Partial Income Statement

For year ended Dec-31,2017

Cost of goods sold :

Beginning finished goods inventory $500,000

Add: Cost of goods manufacture $875,000

Goods available for sale $1,375,000

Less: Ending finished inventory $$225,000

Cost of goods sold $1,150,000

We simply applied the above format