Exercise 8-3 Determining cost of goods sold; periodic inventory system [Lo8-1] A

Question

Exercise 8-3 Determining cost of goods sold; periodic inventory system [Lo8-1] Askew Company uses a periodic inventory system. The June 30, 2018, year-end trial balance for the company contained the following information Debit Credit 33,200 nt Merchandise inventory, 7/1/17 Sales Sales returns Purchases Purchase discounts Purchase returns Freight-in 392,000 13,200 252,000 7,200 11,200 19,400 In addition, you determine that the June 30, 2018, inventory balance is $41,200. Required: 1. Calculate the cost of goods sold for the Askew Company for the year ending June 30, 2018. 2. Prepare the year-end adjusting entry to record cost of goods sold.

Explanation / Answer

Inventory (beginning)

Purchases

Freight-in

Solution: 1. Cost of goods sold $245,000 Working Notes: Beginning Inventory 33,200 Add: Purchases 252,000 Add: Freight-in 19,400 Less: Purchase discount ($7,200) Less: Purchase returns ($11,200) Less: Ending inventory balance ($41,200) Cost of goods sold 245,000 2. Sr. No. General Journal Debit Credit 1 Cost of goods sold 245,000 Inventory (Ending) 41,200 Purchase returns 11,200 Purchase discounts 7,200

Inventory (beginning)

33,200

Purchases

252,000

Freight-in

19,400 Please feel free to ask if anything about above solution in comment section of the question.

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