The trial balance of Larkspur, Inc. at the end of its fiscal year, August 31, 2020, includes these accounts: Inventory $19,500; Purchases $155,500; Sales Revenue $193,000; Freight-In $4,000; Sales Returns and Allowances $3,350; Freight-Out $1,750; and Purchase Returns and Allowances $2,600. The ending inventory is $24,500. Prepare a cost of goods sold section for the year ending August 31 (periodic inventory).

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Business

Nicolas Pena

18 March, 13:31

The trial balance of Larkspur, Inc. at the end of its fiscal year, August 31, 2020, includes these accounts: Inventory $19,500; Purchases $155,500; Sales Revenue $193,000; Freight-In $4,000; Sales Returns and Allowances $3,350; Freight-Out $1,750; and Purchase Returns and Allowances $2,600. The ending inventory is $24,500. Prepare a cost of goods sold section for the year ending August 31 (periodic inventory).

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Ahmed Taylor · Answer 1

The preparation of the cost of goods section for the year august 31 is presented below:

Beginning inventory $19,500 (A)

Purchase $155,500

Less: Purchase return

And allowances - $2,600

Net purchase $152,900

Add: freight in $4,000

Cost of goods purchased $156,900 (B)

Cost of goods available $176,400 (A + B)

Less: ending inventory $24,500

Cost of goods sold $151,900