Question

The trial balance of Sheffield Corp. at the end of its fiscal year, August 31, 2020, includes these accounts: Inventory $19,500; Purchases $156,000; Sales Revenue $193,000; Freight-In $4,350; Sales Returns and Allowances $3,200; Freight-Out $1,700; and Purchase Returns and Allowances $3,000. The ending inventory is $24,500. Prepare a cost of goods sold section for the year ending August 31 (periodic inventory).

Answer 1

Answer:

Cost of goods sold                                                  $  152,350

Explanation:

Opening Inventory                                                      $ 19,500

Purchases                                   $ 156,000

Freight in                                     $    4,350

Purchase Returns                       $ ( 3,000)

Net Purchases                                                           $ 157,350

Cost of goods available                                           $ 176,850

Less: Ending Inventory                                           $ ( 24,500)

Cost of goods sold                                                  $  152,350

The sales, sales returns and allowances and freight out are related to the total sales revenue and are thus not considered in the cost of goods sold.