Cost of goods sold: Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas: C o s t o f g o o d s s o l d = B e g i n n i n g m e r c h a n d i s e i n v e n t o r y + C o s t o f p u r c h a s e s − E n d i n g m e r c h a n d i s e i n v e n t o r y C o s t o f g o o d s s o l d f o r f i n i s h e d g o o d s = B e g i n n i n g f i n i s h e d g o o d s i n v e n t o r y + C o s t o f g o o d s m a n u f a c t u r e d − E n d i n g f i n i s h e d g o o d s i n v e n t o r y Requirement 1: To calculate: Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 5PSA

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Requirement 1:

To calculate:

Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

Expert Solution

Answer to Problem 5PSA

Cost of goods sold as at December 31, 2015:

For Music World Retail = $3, 25,000

For Wave- Board Manufacturing = $11, 50,000

Explanation of Solution

To calculate cost of goods sold for Music World Retail, following formula would be used:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

In the given problem, following information is given:

Beginning merchandise inventory = $2, 00,000

Cost of purchases = $3, 00,000

Ending merchandise inventory = $1, 75,000

Therefore, Cost of goods sold for Music world Retail would be:

Cost of goods sold= $2,00,000+ $3,00,000− $1,75,000= $3,25,000

Further for calculation of cost of goods sold for Wave- Board Manufacturing, below- mentioned formula would be used:

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Following information is given in the given problem:

Beginning finished goods inventory = $5, 00,000

Cost of goods manufactured = $8, 75,000

Ending finished goods inventory = $2, 25,000

Thus, cost of goods sold= $5,00,000+ $8,75000− $2,25,000= $11,50,000

Cost of goods sold section of the Income statement at December 31, 2015 for both the companies as asked in the given problem is tabulated below:

Schedule of cost of goods sold for both the companies (Amount in $):

Particulars	Music World Retail	Wave- Board Manufacturing
Beginning inventory	2,00,000	5,00,000
Add: Cost of purchases/ Cost of goods manufactured	3,00.000	8,75,000
Goods available for sale	5,00,000	13,75,000
Less: Ending inventory	(1,75,000)	(2,25,000)
Cost of goods sold	3,25,000	11,50,000

Thus, Cost of goods sold for Music World Retail is coming out to be $3, 25,000 and that of Wave- Board Manufacturing as $11, 50,000.

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold.

Requirement 2:

Memorandum to instructor (a) identifying inventory accounts and (b) describing where each item is reported on income statement and balance sheet of both the companies.

Expert Solution

Answer to Problem 5PSA

Beginning inventory is shown in the Income Statement
Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.
Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Explanation of Solution

Memorandum to instructor To: Instructor

Subject: Memorandum identifying inventory accounts and describing where each item is reported

Details:

All the account heads are listed below:

Beginning inventory is shown in the Income Statement

Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.

When the goods are purchased or manufactured, following entry would be passed in the accounting books:

Date	Particulars	L.F.	Debit Amount (in $)	Credit Amount (in $)
	Cost of purchases		XXX
	Account Payable			XXX
	(Being goods purchased or manufactured)

Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 5PSA

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Requirement 1:

To calculate:

Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

Expert Solution

Answer to Problem 5PSA

Cost of goods sold as at December 31, 2015:

For Music World Retail = $3, 25,000

For Wave- Board Manufacturing = $11, 50,000

Explanation of Solution

To calculate cost of goods sold for Music World Retail, following formula would be used:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

In the given problem, following information is given:

Beginning merchandise inventory = $2, 00,000

Cost of purchases = $3, 00,000

Ending merchandise inventory = $1, 75,000

Therefore, Cost of goods sold for Music world Retail would be:

Cost of goods sold= $2,00,000+ $3,00,000− $1,75,000= $3,25,000

Further for calculation of cost of goods sold for Wave- Board Manufacturing, below- mentioned formula would be used:

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Following information is given in the given problem:

Beginning finished goods inventory = $5, 00,000

Cost of goods manufactured = $8, 75,000

Ending finished goods inventory = $2, 25,000

Thus, cost of goods sold= $5,00,000+ $8,75000− $2,25,000= $11,50,000

Cost of goods sold section of the Income statement at December 31, 2015 for both the companies as asked in the given problem is tabulated below:

Schedule of cost of goods sold for both the companies (Amount in $):

Particulars	Music World Retail	Wave- Board Manufacturing
Beginning inventory	2,00,000	5,00,000
Add: Cost of purchases/ Cost of goods manufactured	3,00.000	8,75,000
Goods available for sale	5,00,000	13,75,000
Less: Ending inventory	(1,75,000)	(2,25,000)
Cost of goods sold	3,25,000	11,50,000

Thus, Cost of goods sold for Music World Retail is coming out to be $3, 25,000 and that of Wave- Board Manufacturing as $11, 50,000.

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold.

Requirement 2:

Memorandum to instructor (a) identifying inventory accounts and (b) describing where each item is reported on income statement and balance sheet of both the companies.

Expert Solution

Answer to Problem 5PSA

Beginning inventory is shown in the Income Statement
Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.
Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Explanation of Solution

Memorandum to instructor To: Instructor

Subject: Memorandum identifying inventory accounts and describing where each item is reported

Details:

All the account heads are listed below:

Beginning inventory is shown in the Income Statement

Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.

When the goods are purchased or manufactured, following entry would be passed in the accounting books:

Date	Particulars	L.F.	Debit Amount (in $)	Credit Amount (in $)
	Cost of purchases		XXX
	Account Payable			XXX
	(Being goods purchased or manufactured)

Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 5PSA

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Requirement 1:

To calculate:

Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

Expert Solution

Answer to Problem 5PSA

Cost of goods sold as at December 31, 2015:

For Music World Retail = $3, 25,000

For Wave- Board Manufacturing = $11, 50,000

Explanation of Solution

To calculate cost of goods sold for Music World Retail, following formula would be used:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

In the given problem, following information is given:

Beginning merchandise inventory = $2, 00,000

Cost of purchases = $3, 00,000

Ending merchandise inventory = $1, 75,000

Therefore, Cost of goods sold for Music world Retail would be:

Cost of goods sold= $2,00,000+ $3,00,000− $1,75,000= $3,25,000

Further for calculation of cost of goods sold for Wave- Board Manufacturing, below- mentioned formula would be used:

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Following information is given in the given problem:

Beginning finished goods inventory = $5, 00,000

Cost of goods manufactured = $8, 75,000

Ending finished goods inventory = $2, 25,000

Thus, cost of goods sold= $5,00,000+ $8,75000− $2,25,000= $11,50,000

Cost of goods sold section of the Income statement at December 31, 2015 for both the companies as asked in the given problem is tabulated below:

Schedule of cost of goods sold for both the companies (Amount in $):

Particulars	Music World Retail	Wave- Board Manufacturing
Beginning inventory	2,00,000	5,00,000
Add: Cost of purchases/ Cost of goods manufactured	3,00.000	8,75,000
Goods available for sale	5,00,000	13,75,000
Less: Ending inventory	(1,75,000)	(2,25,000)
Cost of goods sold	3,25,000	11,50,000

Thus, Cost of goods sold for Music World Retail is coming out to be $3, 25,000 and that of Wave- Board Manufacturing as $11, 50,000.

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold.

Requirement 2:

Memorandum to instructor (a) identifying inventory accounts and (b) describing where each item is reported on income statement and balance sheet of both the companies.

Expert Solution

Answer to Problem 5PSA

Beginning inventory is shown in the Income Statement
Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.
Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Explanation of Solution

Memorandum to instructor To: Instructor

Subject: Memorandum identifying inventory accounts and describing where each item is reported

Details:

All the account heads are listed below:

Beginning inventory is shown in the Income Statement

Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.

When the goods are purchased or manufactured, following entry would be passed in the accounting books:

Date	Particulars	L.F.	Debit Amount (in $)	Credit Amount (in $)
	Cost of purchases		XXX
	Account Payable			XXX
	(Being goods purchased or manufactured)

Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 5PSA

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Requirement 1:

To calculate:

Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

Expert Solution

Answer to Problem 5PSA

Cost of goods sold as at December 31, 2015:

For Music World Retail = $3, 25,000

For Wave- Board Manufacturing = $11, 50,000

Explanation of Solution

To calculate cost of goods sold for Music World Retail, following formula would be used:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

In the given problem, following information is given:

Beginning merchandise inventory = $2, 00,000

Cost of purchases = $3, 00,000

Ending merchandise inventory = $1, 75,000

Therefore, Cost of goods sold for Music world Retail would be:

Cost of goods sold= $2,00,000+ $3,00,000− $1,75,000= $3,25,000

Further for calculation of cost of goods sold for Wave- Board Manufacturing, below- mentioned formula would be used:

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Following information is given in the given problem:

Beginning finished goods inventory = $5, 00,000

Cost of goods manufactured = $8, 75,000

Ending finished goods inventory = $2, 25,000

Thus, cost of goods sold= $5,00,000+ $8,75000− $2,25,000= $11,50,000

Cost of goods sold section of the Income statement at December 31, 2015 for both the companies as asked in the given problem is tabulated below:

Schedule of cost of goods sold for both the companies (Amount in $):

Particulars	Music World Retail	Wave- Board Manufacturing
Beginning inventory	2,00,000	5,00,000
Add: Cost of purchases/ Cost of goods manufactured	3,00.000	8,75,000
Goods available for sale	5,00,000	13,75,000
Less: Ending inventory	(1,75,000)	(2,25,000)
Cost of goods sold	3,25,000	11,50,000

Thus, Cost of goods sold for Music World Retail is coming out to be $3, 25,000 and that of Wave- Board Manufacturing as $11, 50,000.

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold.

Requirement 2:

Memorandum to instructor (a) identifying inventory accounts and (b) describing where each item is reported on income statement and balance sheet of both the companies.

Expert Solution

Answer to Problem 5PSA

Beginning inventory is shown in the Income Statement
Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.
Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Explanation of Solution

Memorandum to instructor To: Instructor

Subject: Memorandum identifying inventory accounts and describing where each item is reported

Details:

All the account heads are listed below:

Beginning inventory is shown in the Income Statement

Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.

When the goods are purchased or manufactured, following entry would be passed in the accounting books:

Date	Particulars	L.F.	Debit Amount (in $)	Credit Amount (in $)
	Cost of purchases		XXX
	Account Payable			XXX
	(Being goods purchased or manufactured)

Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

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Answer 5

Chapter 1, Problem 5PSA

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Requirement 1:

To calculate:

Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

Expert Solution

Answer to Problem 5PSA

Cost of goods sold as at December 31, 2015:

For Music World Retail = $3, 25,000

For Wave- Board Manufacturing = $11, 50,000

Explanation of Solution

To calculate cost of goods sold for Music World Retail, following formula would be used:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

In the given problem, following information is given:

Beginning merchandise inventory = $2, 00,000

Cost of purchases = $3, 00,000

Ending merchandise inventory = $1, 75,000

Therefore, Cost of goods sold for Music world Retail would be:

Cost of goods sold= $2,00,000+ $3,00,000− $1,75,000= $3,25,000

Further for calculation of cost of goods sold for Wave- Board Manufacturing, below- mentioned formula would be used:

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Following information is given in the given problem:

Beginning finished goods inventory = $5, 00,000

Cost of goods manufactured = $8, 75,000

Ending finished goods inventory = $2, 25,000

Thus, cost of goods sold= $5,00,000+ $8,75000− $2,25,000= $11,50,000

Cost of goods sold section of the Income statement at December 31, 2015 for both the companies as asked in the given problem is tabulated below:

Schedule of cost of goods sold for both the companies (Amount in $):

Particulars	Music World Retail	Wave- Board Manufacturing
Beginning inventory	2,00,000	5,00,000
Add: Cost of purchases/ Cost of goods manufactured	3,00.000	8,75,000
Goods available for sale	5,00,000	13,75,000
Less: Ending inventory	(1,75,000)	(2,25,000)
Cost of goods sold	3,25,000	11,50,000

Thus, Cost of goods sold for Music World Retail is coming out to be $3, 25,000 and that of Wave- Board Manufacturing as $11, 50,000.

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold.

Requirement 2:

Memorandum to instructor (a) identifying inventory accounts and (b) describing where each item is reported on income statement and balance sheet of both the companies.

Expert Solution

Answer to Problem 5PSA

Beginning inventory is shown in the Income Statement
Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.
Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Explanation of Solution

Memorandum to instructor To: Instructor

Subject: Memorandum identifying inventory accounts and describing where each item is reported

Details:

All the account heads are listed below:

Beginning inventory is shown in the Income Statement

Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.

When the goods are purchased or manufactured, following entry would be passed in the accounting books:

Date	Particulars	L.F.	Debit Amount (in $)	Credit Amount (in $)
	Cost of purchases		XXX
	Account Payable			XXX
	(Being goods purchased or manufactured)

Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Answer 6

Chapter 1, Problem 5PSA

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Requirement 1:

To calculate:

Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

Expert Solution

Answer to Problem 5PSA

Cost of goods sold as at December 31, 2015:

For Music World Retail = $3, 25,000

For Wave- Board Manufacturing = $11, 50,000

Explanation of Solution

To calculate cost of goods sold for Music World Retail, following formula would be used:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

In the given problem, following information is given:

Beginning merchandise inventory = $2, 00,000

Cost of purchases = $3, 00,000

Ending merchandise inventory = $1, 75,000

Therefore, Cost of goods sold for Music world Retail would be:

Cost of goods sold= $2,00,000+ $3,00,000− $1,75,000= $3,25,000

Further for calculation of cost of goods sold for Wave- Board Manufacturing, below- mentioned formula would be used:

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Following information is given in the given problem:

Beginning finished goods inventory = $5, 00,000

Cost of goods manufactured = $8, 75,000

Ending finished goods inventory = $2, 25,000

Thus, cost of goods sold= $5,00,000+ $8,75000− $2,25,000= $11,50,000

Cost of goods sold section of the Income statement at December 31, 2015 for both the companies as asked in the given problem is tabulated below:

Schedule of cost of goods sold for both the companies (Amount in $):

Particulars	Music World Retail	Wave- Board Manufacturing
Beginning inventory	2,00,000	5,00,000
Add: Cost of purchases/ Cost of goods manufactured	3,00.000	8,75,000
Goods available for sale	5,00,000	13,75,000
Less: Ending inventory	(1,75,000)	(2,25,000)
Cost of goods sold	3,25,000	11,50,000

Thus, Cost of goods sold for Music World Retail is coming out to be $3, 25,000 and that of Wave- Board Manufacturing as $11, 50,000.

Answer 7

Chapter 1, Problem 5PSA

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold. It can be calculated using the following formulas:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Requirement 1:

To calculate:

Cost of goods sold section of partial income statement at December 31, 2015 for both the companies.

Answer 8

Expert Solution

Answer to Problem 5PSA

Cost of goods sold as at December 31, 2015:

For Music World Retail = $3, 25,000

For Wave- Board Manufacturing = $11, 50,000

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

To calculate cost of goods sold for Music World Retail, following formula would be used:

Cost of goods sold= Beginning merchandise inventory+ Cost of purchases− Ending merchandise inventory

In the given problem, following information is given:

Beginning merchandise inventory = $2, 00,000

Cost of purchases = $3, 00,000

Ending merchandise inventory = $1, 75,000

Therefore, Cost of goods sold for Music world Retail would be:

Cost of goods sold= $2,00,000+ $3,00,000− $1,75,000= $3,25,000

Further for calculation of cost of goods sold for Wave- Board Manufacturing, below- mentioned formula would be used:

Cost of goods sold for finished goods= Beginning finished goods inventory+ Cost of goods manufactured− Ending finished goods inventory

Following information is given in the given problem:

Beginning finished goods inventory = $5, 00,000

Cost of goods manufactured = $8, 75,000

Ending finished goods inventory = $2, 25,000

Thus, cost of goods sold= $5,00,000+ $8,75000− $2,25,000= $11,50,000

Cost of goods sold section of the Income statement at December 31, 2015 for both the companies as asked in the given problem is tabulated below:

Schedule of cost of goods sold for both the companies (Amount in $):

Particulars	Music World Retail	Wave- Board Manufacturing
Beginning inventory	2,00,000	5,00,000
Add: Cost of purchases/ Cost of goods manufactured	3,00.000	8,75,000
Goods available for sale	5,00,000	13,75,000
Less: Ending inventory	(1,75,000)	(2,25,000)
Cost of goods sold	3,25,000	11,50,000

Thus, Cost of goods sold for Music World Retail is coming out to be $3, 25,000 and that of Wave- Board Manufacturing as $11, 50,000.

Answer 13

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold.

Requirement 2:

Memorandum to instructor (a) identifying inventory accounts and (b) describing where each item is reported on income statement and balance sheet of both the companies.

Expert Solution

Answer to Problem 5PSA

Beginning inventory is shown in the Income Statement
Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.
Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Explanation of Solution

Memorandum to instructor To: Instructor

Subject: Memorandum identifying inventory accounts and describing where each item is reported

Details:

All the account heads are listed below:

Beginning inventory is shown in the Income Statement

Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.

When the goods are purchased or manufactured, following entry would be passed in the accounting books:

Date	Particulars	L.F.	Debit Amount (in $)	Credit Amount (in $)
	Cost of purchases		XXX
	Account Payable			XXX
	(Being goods purchased or manufactured)

Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Answer 14

To determine

Concept introduction:

Cost of goods sold:

Cost of goods sold is the costs incurred for manufacturing or acquiring the products sold by a company in a given year. It includes all the direct costs incurred for the products sold.

Requirement 2:

Memorandum to instructor (a) identifying inventory accounts and (b) describing where each item is reported on income statement and balance sheet of both the companies.

Answer 15

Expert Solution

Answer to Problem 5PSA

Beginning inventory is shown in the Income Statement
Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.
Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Answer 16

Expert Solution

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Memorandum to instructor To: Instructor

Subject: Memorandum identifying inventory accounts and describing where each item is reported

Details:

All the account heads are listed below:

Beginning inventory is shown in the Income Statement

Cost of purchases or cost of goods manufactured is charged to Income Statement. Further, the ending Accounts Payables are listed as Liabilities in the Balance Sheet.

When the goods are purchased or manufactured, following entry would be passed in the accounting books:

Date	Particulars	L.F.	Debit Amount (in $)	Credit Amount (in $)
	Cost of purchases		XXX
	Account Payable			XXX
	(Being goods purchased or manufactured)

Ending inventory is shown at credit side as Income in the Income statement and as Current Asset in the Balance Sheet.

Answer 20

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Answer to Problem 5PSA

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Answer to Problem 5PSA

Explanation of Solution

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