Question

At the beginning of the year, Johnson Supply has inventory of $5,200. During the year, the company purchases an additional $20,000 of inventory. An inventory count at the end of the year reveals remaining inventory of $3,000. What amount will Bennett report for cost of goods sold?
a. $8,200
b. $17,800
c. $20,000
d. $22,200

Answer 1

Answer:

d. $22,200

Explanation:

Costs of goods sold are the expenses incurred in the production of products sold by a firm. Calculating the cost of goods sold (COGS) is as follows

COGS=Opening Inventory+Purchases −Closing Inventory.

In this case:

Opening inventory is $5,200

Purchases :  $20,000

Closing inventory is $ 3,000

Therefore:

COGS = $5,200+ $20,000 -$3,000

COGS =$22,200