Question

Beginning inventory Merchandise $ 275,000 Finished goods $ 450,000 Cost of purchases 500,000 Cost of goods manufactured 900,000 Ending inventory Merchandise 115,000 Finished goods 375,000 Compute cost of goods sold for each of these two companies for the year.

Answer 1

Results are below.

Step-by-step explanation:

Giving the following information:

Company 1:

Beginning inventory Merchandise $ 275,000

Cost of purchases 500,000

Ending inventory Merchandise 115,000

Company 2:

Cost of goods manufactured 900,000

Ending Finished goods 375,000

Beginning Finished goods $ 450,000

To calculate the cost of goods sold, we need to use the following formula:

COGS= beginning finished inventory + cost of goods manufactured/purchased - ending finished inventory

Company 1:

COGS= 275,000 + 500,000 - 115,000

COGS= $660,000

Company 2:

COGS= 900,000 + 375,000 - 450,000

COGS= $825,000