Question

The trial balance of Rachel Company at the end of its fiscal year, August 31, 2017, includes these accounts: Inventory $29,200; Purchases $144,000; Sales Revenue $190,000; Freight-In $8,000; Sales Returns and Allowances $3,000; Freight-Out $1,000; and Purchases Returns and Allowances $5,000. The ending inventory is $25,000. Prepare a cost of goods sold section for the year ending August 31.

Answer 1

Answer:

$151,200

Explanation:

The cost of goods sold is the beginning inventory plus purchases  plus freight-in, minus purchases returns and allowances minus ending inventory

Cost of goods sold extract of income statement:

Beginning inventory                                                                             $29,200

Purchases                                                                      $144,000

Freight-in                                                                        $8,000

Purchases returns and allowances                             ($5,000)

Net purchases                                                                                    $147,000

cost of goods available for sale                                                         $176,200  

ending inventory                                                                               ($25,000)

cost of goods sold                                                                               $151,200

The cost of goods sold is $151,200,which would be deducted from net sales in order to arrive at gross profit