Question

A sporting equipment store expects to purchase $7,600 of ski boots in October. The store had $3,600 of ski boots in merchandise inventory at the beginning of October, and expects to have $2,600 of ski boots in merchandise inventory at the end of October to cover part of anticipated November sales. What is the budgeted cost of goods sold for October?

Answer 1

$8,600

Step-by-step explanation:

The movement in the balance of inventory at the start and end of a period is as a result of sales and purchases. While sales reduces the balance in inventory, purchases increases the balance.

This may be expressed mathematically as

Opening balance + purchases - cost of goods sold = closing balance

$3,600 + $7,600 - cost of goods sold = $2,600

cost of goods sold = $3,600 + $7,600 - $2,600

= $8,600

Answer 2

Cost of Goods Sold for October is $8,600

Step-by-step explanation:

Goods available to sale is the sum to Beginning Inventory and the production / Purchases for the period.

Goods Available for sale = Beginning Inventory + Purchases = $3,600 = $7,600 = $11,200

Cost of Goods sold is the cost of the unit sold which is incurred to produce / purchase that products. It is calculated by deducting the ending inventory from goods available to sale.

Cost of Goods Sold = Goods available for sale - Ending Inventory = $11,200 - $2,600 = $8,600