Question

ABC, Inc has a beginning inventory of $12,000. During the year they purchase $150,000 more inventory. At the end of the year, they take a physical inventory and determine $20,000 is still there (ending inventory). What is ABC, inc’s cost of goods sold (CGS) for the year?

Answer 1

Answer:

cost of goods sold during the year = $142,000

Explanation:

First of all, let us calculate the total cost of goods acquired during the year, as follows:

Total cost of goods acquired = beginning inventory + purchases

= 12,000 + 150,000 = $162,000

Next, we are told that there was an ending inventory of $20,000, therefore, the cost of goods sold is calculated as follows:

cost of goods sold = total cost of goods acquired - ending inventory

= 162,000 - 20,000 = $ 142,000

Therefore inventory worth $142,000 was sold during the year