Question

The following balances were reported by Sparky Co. at December 31, 20x2 and 20x1: December 31, 20x2 December 31, 20x1 Inventory $260,000 $290,000 Accounts Payable 75,000 50,000 Accrued Expenses 5,000 15,000 Sparky paid suppliers $490,000 during the year ended December 31, 20x2. What amount should Sparky report for Cost of Goods Sold in 20x2

Answer 1

$435,000

Step-by-step explanation:

The first step is to calculate the purchases that was made

= $50,000 + $490,000 - $75,000

= $540,000-$75,000

= $465,000

Therefore the cost of goods sold can be calculated as follows

Cost of goods + ending inventory = beginning inventory + purchase.

Cost of goods + $290,000= $260,000 + $465,000

Cost of goods + $290,000=$725,000

Cost of goods sold = $725,000-$290,000

= $435,000

Hence the cost of goods sold in 20x2 is $435,000