Question

Problem 3-4 Inventories (LO 3.2) Kevin owns a retail store, and during the current year he purchased $610,000 worth of inventory. Kevin's beginning inventory was $57,000, and his ending inventory is $77,200. During the year, Kevin withdrew $1.780 in inventory for his personal use. Assume that he uses the cost method to value the inventory and there was no change in determining quantities, costs, or valuations between opening and closing inventory. Use Part III of Schedule C below to calculate Kevin's cost of goods sold for the year. Enter amounts as positive numbers. Part III Cost of Goods Sold (see instructions) 33 Method(s) used to value closing inventory: Cost 34 Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If "Yes," attach explanation No 35 Inventory at beginning of year. If different from last year's closing inventory, attach explanation ... 35 36 37 38 36 Purchases less cost of items withdrawn for personal use 37 Cost of labor. Do not include any amounts paid to yourself. 38 Materials and supplies. 39 Other costs.. 40 Add lines 35 through 39 41 Inventory at end of year.. 39 40 41 42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4..... 42 Feedback Check My Work The cost of inventory a taxpayer owns has a significant impact on the taxable income of the taxpayer. The deduction for the cost of goods sold of a retail business is a direct function of the amount of the beginning and ending inventories.

Answer 1

34. Inventory in the beginning of the year $67000

36. Purchase less personal withdrawal. $608220 (610000-1780)

40. Add line 35 through 39. $675220

41. Inventory at the end of year $77200

42. Cost of goods sold $598020