Question

The trial balance of D. Savage Company at the end of its fiscal year, August 31, 2017, includes these accounts: Inventory $17,200, Purchases $149,000, Sales Revenue $190,000, Freight-In $5,000, Sales Returns and Allowances $3,000, Freight-Out $1,000, and Purchase Returns and Allowances $2,000. The ending merchandise inventory is $23,000. Prepare a cost of goods sold section for the year ending August 31 (periodic inventory).

Answer 1

Answer and Explanation:

The preparation of the cost of goods sold is presented below:

Cost of goods sold statement

Opening inventory  $17,200

Add:

Purchase    $149,000

Freight in  -$4,350

Less:

Purchase Return  -$2,000

Less:

Closing inventory  -$23,000

Cost of goods sold $136,850