A small gift shop has a beginning inventory valued at [tex]$\$[/tex]10,500[tex]$. If the additional inventory detailed in the box below is purchased, and the ending inventory is valued at $[/tex]\[tex]$1,500$[/tex] after a certain period, what is the cost of goods sold over this period?

\begin{tabular}{|l|c|c|c|}
\hline
\multicolumn{4}{|c|}{ Additional Inventory Purchased } \\
\hline
\multicolumn{1}{|c|}{ Item } & Cost & Units & Total \\
\hline
Puzzles & [tex]$\$[/tex]15.00[tex]$ & 10 & $[/tex]\[tex]$150.00$[/tex] \\
\hline
Shirts & [tex]$\$[/tex]18.00[tex]$ & 15 & $[/tex]\[tex]$270.00$[/tex] \\
\hline
Key Chains & [tex]$\$[/tex]5.50[tex]$ & 20 & $[/tex]\[tex]$110.00$[/tex] \\
\hline
\end{tabular}



Answer :

To determine the cost of goods sold (COGS) for the gift shop over a specific period, we need to follow several steps. Here is a detailed, step-by-step solution:

1. Calculate Total Cost of Additional Inventory Purchased:
- For Puzzles:
- Cost per puzzle = \[tex]$15.00 - Number of puzzles purchased = 10 - Total cost for puzzles = $[/tex]15.00 \times 10 = \[tex]$150.00 - For Shirts: - Cost per shirt = \$[/tex]18.00
- Number of shirts purchased = 15
- Total cost for shirts = [tex]$18.00 \times 15 = \$[/tex]270.00

- For Key Chains:
- Cost per key chain = \[tex]$5.50 - Number of key chains purchased = 20 - Total cost for key chains = $[/tex]5.50 \times 20 = \[tex]$110.00 - Sum all these total costs to get the total additional inventory purchased: - Total additional inventory = \$[/tex]150.00 (puzzles) + \[tex]$270.00 (shirts) + \$[/tex]110.00 (key chains) = \[tex]$530.00 2. Calculate the Cost of Goods Available for Sale: - Begin with beginning inventory value: - Beginning inventory = \$[/tex]10,500
- Add the total cost of additional inventory purchased:
- Total additional inventory = \[tex]$530.00 - Total cost of goods available for sale = \$[/tex]10,500 + \[tex]$530.00 = \$[/tex]11,030.00

3. Determine the Ending Inventory Value:
- Ending inventory value = \[tex]$1,500 4. Calculate the Cost of Goods Sold (COGS): - Use the formula: - COGS = Cost of goods available for sale - Ending inventory - Plug in the values: - COGS = \$[/tex]11,030.00 - \[tex]$1,500 = \$[/tex]9,530.00

Therefore, the cost of goods sold (COGS) for the gift shop over this period is \$9,530.00.