Question

Elm Corporation is a merchandising company. The year began with inventory of $23,000, Purchases for the year were $48,000, and the Ending Inventory was $10,000. What is the Cost of Goods Sold that would be reported on the income statement?

Answer 1

Answer:

$61,000

Explanation:

The movements in the inventory balance for a period (that is the difference between the opening and closing balances in inventory) is the net of purchases and sales during the period.

This may be expressed mathematically as

Opening balance + purchases - cost of goods sold = closing balance

$23,000 + $48,000 - cost of goods sold = $10,000

Cost of goods sold = $61,000

This is the amount to be reported in the income statement.

Answer 2

Answer:

The Cost of Goods Sold to be reported on Income statement for the eyar is $61000

Explanation:

The cost of goods sold is the cost of inventory that a firm has sold in a particular period.

the cost of goods sold can be calculated using the following formula,

Cost of Goods sold = Opening inventory + Purchases - Closing Inventory

So, for Elm Corporation the cost of goods sold is,

COGS = 23000 + 48000 - 10000 = $61000