I am really struggling with this question and my accounting book is no help at all.
A company has $4500 in net sales, $3200 in gross profit, $1300 in ending inventory, and $1800 in beginning inventory. What is the cost of goods sold?
Im not looking for the answer, just a formula is there is one.
Thank you very much.
sure there is
To calculate the cost of goods sold (COGS), you can use the following formula:
COGS = Beginning Inventory + Purchases - Ending Inventory
Where:
- Beginning Inventory refers to the value of inventory at the beginning of the accounting period.
- Purchases refer to the value of additional inventory purchased during the accounting period.
- Ending Inventory refers to the value of inventory at the end of the accounting period.
In this case, you have been given the information for net sales, gross profit, ending inventory, and beginning inventory. To find the COGS, you will need to rearrange the formula:
COGS = Beginning Inventory + Purchases - Ending Inventory
Since you don't have the value for purchases, you can use the following formula derived from the given information:
COGS = Net Sales - Gross Profit + Ending Inventory - Beginning Inventory
Using the provided values (Net Sales = $4500, Gross Profit = $3200, Ending Inventory = $1300, Beginning Inventory = $1800), you can substitute these values into the formula:
COGS = $4500 - $3200 + $1300 - $1800
By calculating this equation, you will be able to determine the cost of goods sold for the company.