Answered: The club had beginning inventory of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The club had beginning inventory of $8000 and purchases of $1200. The company had cost of goods sold amounting to $3,600. What is the amount of ending inventory? A. $5,600 B. $3,200 C. $6,800 D. $4,400

Expert Solution

Context:

Cost of Goods Sold: Cost of Goods sold is the Cost of the items that are sold it is calculated for knowing the gross profit of the company.

Beginning inventory: beginning inventory is the inventory that is unsold in the previous period which is needed to be sold in the current period

Ending inventory: Ending inventory is the inventory that is unsold in the current period that is to be sold in the next period

Purchases: Purchases are the goods that are purchased for the purpose of selling

Relationship between Cost of Goods sold, Beginning inventory, ending inventory, Purchases

Cost of Goods sold = Beginning inventory + Purchases – Ending inventory

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