Question

Pharoah Company accounting records show the following at the year ending on December 31, 2022.

Purchase Discounts $ 11900
Freight-in 15600
Purchases 724020
Beginning Inventory 42000
Ending Inventory 50600
Purchase Returns and Allowances 10700
Using the periodic system, the cost of goods sold is:_______.

Answer 1

The cost of goods sold (COGS) for Pharaoh Company for the year ending December 31, 2022, using the periodic system formula, is calculated to be $708,420.

Step-by-step explanation:

To calculate the cost of goods sold (COGS) using the periodic system, we use the following formula:

• Beginning Inventory
• + Purchases
• - Purchase Returns and Allowances
• - Purchase Discounts
• + Freight-in
• - Ending Inventory

Applying the provided figures:

• Beginning Inventory: $42,000
• + Purchases: $724,020
• - Purchase Returns and Allowances: $10,700
• - Purchase Discounts: $11,900
• + Freight-in: $15,600
• - Ending Inventory: $50,600

Now, let's calculate COGS:

COGS = $42,000 + $724,020 - $10,700 - $11,900 + $15,600 - $50,600

COGS = $708,420

The periodic inventory system is important for businesses to understand the flow of inventory costs throughout an accounting period. In this example, the Pharaoh Company's cost of goods sold for the year ending December 31, 2022, is $708,420.

Answer 2

$ 708,420.00

Step-by-step explanation:

The formula for cost of goods sold is given below

Cost of goods sold=beginning inventory +purchases +freight-purchase discounts-purchases allowance and returns-ending inventory

Cost of goods sold=$42,000+$724,020+$15,600-$11,900-$10,700-$50,600=$ 708,420.00

The purchases discount and purchase returns reduce the value of purchases made hence deducted.

The ending inventory is left in stock as a result is also deducted