Question

3) Glen company has the following data pertaining to the year ended December 31. Purchases $450,000 Beginning inventory 170,000 Ending inventory 210,000 Freight-in 50,000 Freight-out 75,000 How much is the cost of goods sold for the year a) $385,000 b) $460,000 c) $485.000 d) 535,000

Answer 1

Hey,

I have solved this question by using Cost of Goods Sold (COGS) formula, where freight - in included in Cost as it's related directly to Production Cost. Where Freight - Out directly related to Sales and incurred during Sales Process, not at the time of Production.

Answer Aus len Company # Cost of Goods Sold (cous) Total Cost of goods sold by a Company. It includes material, Labour and freight fald on Purchase used directly for production of goods! Cost of Goods Sold = Beglining Inventory (+) Purchases ( freight-in (Purchases). (-) Ending Inventory = $ 170,000 + $450,000 $450,000 $2,10,000 = $ 4,60,000 Ans - (B) to sales, not Freight-out - not included, as it is related for Production of goods, Scanned with CamScanner