Five Guys is an American fast food restaurant chain focused on hamburgers, hot dogs, and French fries. The June 30, 2024, year-end trial balance for Five Guys contained the following information: Account Inventory, 7/1/2023 Sales revenue Sales returns Purchases Purchase discounts Purchase returns. Freight-in Debit $ 33,500 Cost of goods sold 13,500 255,000 20,000 Credit $ 395,000 7,500 11,500 In addition, you determine that the June 30, 2024, inventory balance is $41,500. Required: Please calculate the cost of goods sold for the Five Guys for the year ending June 30, 2024.

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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**Five Guys Financial Analysis**

Five Guys is an American fast food restaurant chain focused on hamburgers, hot dogs, and French fries. The June 30, 2024, year-end trial balance for Five Guys contained the following information:

| **Account**             | **Debit**   | **Credit**   |
|-------------------------|-------------|--------------|
| Inventory, 7/1/2023     | $33,500     |              |
| Sales revenue           |             | $395,000     |
| Sales returns           | $13,500     |              |
| Purchases               | $255,000    |              |
| Purchase discounts      |             | $7,500       |
| Purchase returns        |             | $11,500      |
| Freight-in              | $20,000     |              |

In addition, you determine that the June 30, 2024, inventory balance is $41,500.

**Required:**

Please calculate the cost of goods sold for the Five Guys for the year ending June 30, 2024.

---

**Explanation:**

To calculate the cost of goods sold (COGS), use the following formula:

1. **Beginning Inventory**: $33,500
2. **Add Purchases**: $255,000
3. **Less Purchase Returns**: ($11,500)
4. **Add Freight-in**: $20,000
5. **Less Purchase Discounts**: ($7,500)
6. **Net Purchases**: $255,000 - $11,500 + $20,000 - $7,500 = $256,000
7. **Cost of Goods Available for Sale**: Beginning Inventory + Net Purchases = $33,500 + $256,000 = $289,500
8. **Ending Inventory**: $41,500

**COGS Calculation**: 

Cost of Goods Available for Sale - Ending Inventory = $289,500 - $41,500 = $248,000

**Cost of Goods Sold = $248,000**
Transcribed Image Text:**Five Guys Financial Analysis** Five Guys is an American fast food restaurant chain focused on hamburgers, hot dogs, and French fries. The June 30, 2024, year-end trial balance for Five Guys contained the following information: | **Account** | **Debit** | **Credit** | |-------------------------|-------------|--------------| | Inventory, 7/1/2023 | $33,500 | | | Sales revenue | | $395,000 | | Sales returns | $13,500 | | | Purchases | $255,000 | | | Purchase discounts | | $7,500 | | Purchase returns | | $11,500 | | Freight-in | $20,000 | | In addition, you determine that the June 30, 2024, inventory balance is $41,500. **Required:** Please calculate the cost of goods sold for the Five Guys for the year ending June 30, 2024. --- **Explanation:** To calculate the cost of goods sold (COGS), use the following formula: 1. **Beginning Inventory**: $33,500 2. **Add Purchases**: $255,000 3. **Less Purchase Returns**: ($11,500) 4. **Add Freight-in**: $20,000 5. **Less Purchase Discounts**: ($7,500) 6. **Net Purchases**: $255,000 - $11,500 + $20,000 - $7,500 = $256,000 7. **Cost of Goods Available for Sale**: Beginning Inventory + Net Purchases = $33,500 + $256,000 = $289,500 8. **Ending Inventory**: $41,500 **COGS Calculation**: Cost of Goods Available for Sale - Ending Inventory = $289,500 - $41,500 = $248,000 **Cost of Goods Sold = $248,000**
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