Question

Aha! Inc. had inventory of $500,000 at the beginning of 2017. The company purchased $2,000,000 less purchase discount of 10%. The freight cost was $200,000 and the company had inventory of $300,000 at the end of the year. What is the company’s 2017 cost of goods sold?

Answer 1

Answer:

$2200000

Explanation:

Given: Beginning inventory= $500000.

           Inventory purchased= $2000000 with discount of 10%.

           Freight cost= $200000.

           Ending Inventory= $300000.

Cost of goods sold= $Beginning\ inventory+ inventory\ purchased+ freight\ cost - Ending\ inventory$

⇒ Cost of goods sold= $500000+ (2,000,000 - 10\% \times 2,000,000)+ 200,000 - 300,000$

⇒ Cost of goods sold= $700000+ (2,000,000 - 2,00,000) - 300,000$

⇒ Cost of goods sold= $700000+ (18,00,000) - 300,000$

Opening parenthesis

⇒ Cost of goods sold= $2500000- 300000$

∴ Cost of goods sold= $\ 2200000$

Hence, $2200000 is the company’s 2017 cost of goods sold.