Question

Brief Exercise 5-1

Presented below are the components in determining cost of goods sold.

Determine the missing amounts.

Beginning Inventory	Purchases	Costs of Goods available for sale	Ending Inventory	Cost of Goods sold
$84,100	$101,500			$112,000
$53,100		$116,000	$37,000
	$115,000	$156,000	$30,500

Answer 1

Concepts and reason

Accounting: Accounting refers to the process of recording the transactions, classifying it in a specific manner and further summarising and analyzing is done after which the results are interpreted. Financial statements and ledger accounts are prepared in order to accomplish the procedure.

Accounting equation: Accounting equation consists of assets, liabilities, and capital. Total assets are equal to total liabilities. According to this equation, when assets increase, the corresponding increase will happen on either liabilities or owners’ equity — the following formula used for accounting equation.

Transaction: A transaction refers to the act of buying or selling goods or rendering of the service that is reliably measured in terms of money.

Cost: Anything that has been recognized as the monetary value of any commodity or service refers to cost.

Inventory: The inventory refers to the goods which lie at various stages of production and are being made ready for sale.

Fundamentals

Beginning inventory: Beginning inventory is the unit lying in store due non-issuance in the previous period. Beginning inventory of the current period was the ending inventory for the previous period.

Purchases: It refers to the buying of goods or services. The purchase can be made on credit as well as on the cash basis.

Cost of goods available for sale: The cost of goods which are ready for sale is termed as the cost of goods available for sale. The cost of goods available for sale is not adjusted against the ending inventory.

Ending inventory: Ending inventory unit is the units lying in the store due its-non issuance in the current period. Ending inventory for the current period is the beginning inventory for the next period.

Cost of goods sold: Cost of goods sold represents the cost of goods sold out of the manufactured goods. It is the cost which is spent on direct materials, direct labor and manufacturing overheads.

Determine the missing amount of cost of goods available for sale:

Thus, the amount of cost of goods available for sale is $185,600.

Determine the missing amount of ending inventory:

Thus, the amount of ending inventory is $73,600.

Determine the missing amount of purchases:

Thus, the amount of purchases is $62,900.

Determine the missing amount of cost of goods sold:

Thus, the amount of cost of goods sold is $79,000.

Determine the missing amount of beginning inventory:

Thus, the amount of beginning inventory is $41,000.

Determine the missing amount of cost of goods sold:

Thus, the amount of cost of goods sold is $125,500.

Ans:

The amount of cost of goods available for sale is $185,600.

The amount of ending inventory is $73,600.

The amount of purchases is $62,900.

The amount of cost of goods sold is $79,000.

The amount of beginning inventory is $41,000.

The amount of cost of goods sold is $125,500.