The trial balance of Sheffield Corp. at the end of its fiscal year, August 31, 2020, includes these accounts: Inventory $19,500; Purchases $156,000; Sales Revenue $193,000; Freight-In $4,350; Sales Returns and Allowances $3,200; Freight-Out $1,700; and Purchase Returns and Allowances $3,000. 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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1 December, 12:34

The trial balance of Sheffield Corp. at the end of its fiscal year, August 31, 2020, includes these accounts: Inventory $19,500; Purchases $156,000; Sales Revenue $193,000; Freight-In $4,350; Sales Returns and Allowances $3,200; Freight-Out $1,700; and Purchase Returns and Allowances $3,000. 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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Messiah Coleman · Answer 1

Cost of goods sold $ 152,350

Explanation:

Opening Inventory $ 19,500

Purchases $ 156,000

Freight in $ 4,350

Purchase Returns $ (3,000)

Net Purchases $ 157,350

Cost of goods available $ 176,850

Less: Ending Inventory $ (24,500)

Cost of goods sold $ 152,350

The sales, sales returns and allowances and freight out are related to the total sales revenue and are thus not considered in the cost of goods sold.