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8 September, 12:32

Askew Company uses a periodic inventory system. The June 30, 2018, year-end trial balance for the company contained the following information: Account Debit Credit Merchandise inventory, 7/1/17 32,800 Sales 388,000 Sales returns 12,800 Purchases 248,000 Purchase discounts 6,800 Purchase returns 10,800 Freight-in 18,600 In addition, you determine that the June 30, 2018, inventory balance is $40,800. Required: 1. Calculate the cost of goods sold for the Askew Company for the year ending June 30, 2018. 2. Prepare the year-end adjusting entry to record cost of goods sold.

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  1. 8 September, 13:36
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    Answer and Explanation:

    a. The computation of the cost of goods sold is shown below:

    Beginning inventory $32,800

    Add: Net purchase

    Purchase $248,000

    Less: Purchase discount - $6,800

    Less: Purchase returns - $10,800

    Add: Freight in $18,600

    Total net purchased $249,000

    Less: ending inventory - $40,800

    Cost of goods sold $241,000

    2. The year end adjusting entry is

    Cost of goods sold Dr $241,000

    Ending inventory Dr $40,800

    Purchase discount Dr $6,800

    Purchase returns Dr $10,800

    To Beginning inventory $32,800

    To Purchase $248,000

    To freight in $18,600

    (Being the cost of goods sold is recorded)
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