Selected accounts balance from the 12/31/2010 unadjusted trial balance of the Ja

Question

Selected accounts balance from the 12/31/2010 unadjusted trial balance of the Jay Company are listed below:
Debit Credit
Inventory (01/01/x8) $25,000
Purchases 50,000
Purchase Returns and Allowance 5,000
Freight-In 700
Rent Expenses 3,000
General & administrative expenses 4,000
Sales 140,000
Dividends distributed 2,500
In addition, the following information is available:
The inventory value at 12/31/2010 is $12,000.

Required:
Using general journal format, prepare the appropriate inventory related adjusting entries to reflect the cost of goods sold.

Explanation / Answer

Begining Balance Inventory 25000 + Purchases of inventory 50000 + Freight-in costs 700 =Goods Available for sale 75700 -Ending Balance Inventory (12000) Cost of Goods Sold 63700 Journal Entry: Cost of Goods Sold 63700 Inventory 63700

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