The following information is available for ABC Company for the year ended
December 31, 1997:
Ending Inventory …………………………. $7,500
Purchases …………………………………. 31,000
Transportation-in …………………………. 1,500
Beginning Inventory ……………………… 6,000
Sales returns & allowances ……………….. 2,500
Determine the cost of goods sold for 1997.
To determine the cost of goods sold for 1997, you need to calculate the total cost of goods available for sale and subtract the value of ending inventory.
The formula to calculate cost of goods sold is as follows:
Cost of Goods Sold = Beginning Inventory + Purchases + Transportation-in - Ending Inventory
Given the information provided, let's substitute the values:
Beginning Inventory = $6,000
Purchases = $31,000
Transportation-in = $1,500
Ending Inventory = $7,500
Cost of Goods Sold = $6,000 + $31,000 + $1,500 - $7,500
Now, let's calculate the cost of goods sold:
Cost of Goods Sold = $41,000 - $7,500
Cost of Goods Sold = $33,500
Therefore, the cost of goods sold for 1997 is $33,500.