Answer:
Cost of Goods Sold: $245,000
Explanation:
Cost of Goods Sold refers to the direct costs that are incurred when producing the goods sold by a particular company. It includes many costs such as beginning inventory, purchases, purchase returns, discounts on purchases, freight inwards and ending inventory. COGS is also referred to as cost of sales.
Freight inwards are any transportation costs that are incurred when bringing in purchases, hence this is added to purchases. Purchase returns are deducted since they are being returned and hence not a cost. Purchase discounts are also deducted. Ending inventory is the amount of inventory which is remaining and has not been used, thus, this too is deducted.
The calculation for COGS is provided below step-by-step:
1. Beginning inventory : $33200
2. Purchases : $252000
3. Purchase returns : ($11200)
4. Purchase discounts : ($7200)
5. Freight inwards : $19400
6. Ending inventory : ($41200)
Cost of Goods Sold = $245,000
