Question

Cinnamon Buns Co. (CBC) started 2021 with $53,500 of merchandise on hand. During 2021, $283,000 in merchandise was purchased on account with credit terms of 2/10, n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $10,500. Merchandise with an invoice amount of $4,600 was returned for credit. Cost of goods sold for the year was $319,000. CBC uses a perpetual inventory system. Assume instead that (a) freight costs were paid by the vendor, (b) no discounts were taken, and (c) the merchandise on hand at the beginning of 2021 was determined by a physical count that failed to realize that $11,500 of merchandise was being held on consignment for Frosting R Us Inc. What is cost of goods available for sale, assuming CBC uses the gross method to record purchase discounts?

Answer 1

Answer:

currenct available for sale:   348.151‬

without discount and freight piad by supplier and additional units on consignment:

available for sale:   342,400

Explanation:

Cost of goods available for sale:

beginning inventory plus purchase:

begining           53,500

purchase        283,000

discount              5,660

freight-in            10,500

return                 (4,509)

available for sale:   348.151‬

The freightare added as are considered necessary cost to get the merchandise in possesion of the firm.

If no discount and supplier paid freigth:

begining           53,500

adjustment for merchandise on consignment 10,500

purchase        283,000

return                 (4,600)

available for sale:   342,400