Question

Question 3 1 pts Information from ABC Company during the year: Beginning Inventory = $120,000 Purchases = 6 widgets at $10,000 each Sales = 8 widgets that cost $10,000 each Ending Inventory = $100,000 Using the Periodic Inventory Method, determine the adjusting journal entry ABC should book at the end of the period. Select the multiple choice question that best fits your answer Debit to Purchases for $60,000 Debit COGS for $80,000 Debit Beginning Inventory for $120,000 Credit Ending Inventory for $100,000

Answer 1

Solution:
	ABC Company
	Caclulation of Cost of Goods Sold
		Amount
	Beginning Inventory	$             120,000
	Add: Material Purchases($10,000 X 6 Widgets)	$               60,000
	Total Goods Available	$             180,000
	Less: Ending Inventory	$             100,000
	Cost of goods Sold	$               80,000
Jounral entry for adjusting the above is as below,
Journal Entries
Date	Account Title and explanation	Debit	Credit
-----------	Ending inventory	$             100,000
	Cost of Goods Sold (Bal. Figure)	$               80,000
	Purchases		$              60,000
	Beginning inventory		$            120,000
Answer = Option 2 = Debit COGS for $ 80,000