Question

Monte Vista uses the perpetual inventory system. At the beginning of the quarter, Monte Vista has $60,000 in inventory. During the quarter the company purchases $15,800 of new inventory from a vendor, returned $1,400 of inventory to the vendor, and took advantage of discounts from the vendor of $400. At the end of the quarter the balance in inventory is $53,000. What is the cost of goods sold?

Answer 1

Answer:

the cost of goods sold is $21,000

Explanation:

Cost of Goods Sold is equal to Opening Stock add Purchases less Closing Stock.

Calculation of Monte Vista cost of goods sold is as follows :

Opening inventory                                  $60,000

Add Purchases

Purchases                             $15,800

Less Returns Outwards        ( $1,400)

Less Suppliers` Discounts     ( $400)

Total Purchases                                       $14,000

Available for Sale                                     $74,000

Less Closing Stock

Closing Inventory                                    ($53,000)

Cost of goods sold                                   $21,000

Answer 2

Answer:

$21,000

Explanation:

The movements in  a company's inventory balance at the start and end of an accounting period is as a result of purchases and sales.

This may further be influenced by purchase returns, discounts and rebates (which are all considered in getting the net purchase).

Mathematically,

opening balance + net purchases - cost of goods sold = closing balance

$60,000 + ($15,800 - $1,400 - $400) - cost of goods sold = $53,000

Cost of goods sold = $21,000