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The following information comes from the records of Telly’s Supply : Beginning i

ID: 2450618 • Letter: T

Question

The following information comes from the records of Telly’s Supply:

Beginning inventory   $32,000

Inventory purchases    85,000

Transportation-in 4,300

An inventory count taken at year-end indicates that inventory with a cost of $50,000 is on hand as of December 31, 2014.

Assume that inventory purchases and transportation-in are both reflected in the inventory account, which shows an ending balance of $52,000. Compute cost of goods sold along with any adjusting entries required at the end of the period

Explanation / Answer

Solution:

Cost of Goods Sold = Opening Inventory + (Purchases + Transportatio-in) - Ending Inventory

Opening Inventory = $ 32,000

Purchases = $ 85,000

Transportation - in = $ 4,300

Ending Inventory = $ 52,000

Cost of Goods Sold = $ 69,300