Cost of Goods Sold

\begin{tabular}{|l|l|l|l|}
\hline Beginning Inventory & & & [tex]$\$[/tex] 164,000[tex]$ \\
\hline Add: Purchases & $[/tex]\[tex]$ 6,500$[/tex] & & \\
\hline Less: Purchase Discounts & [tex]$\$[/tex] 4,500[tex]$ & & \\
\hline Purchase Returns and Allowances & & $[/tex]\[tex]$ 68,000$[/tex] & \\
\hline Net Purchases & [tex]$\$[/tex] 13,500[tex]$ & & \\
\hline Freight-in & $[/tex]\[tex]$ 81,500$[/tex] & & \\
\hline Cost of Goods Purchased & & & [tex]$\$[/tex] 2[tex]$ \\
\hline Goods Available for Sale & & & $[/tex]\[tex]$ 83,000$[/tex] \\
\hline Less: Ending Inventory & & & \\
\hline Total Cost of Goods Sold & & & \\
\hline
\end{tabular}

What is the Total Cost of Goods Sold, according to the information above?

A. [tex]$\$[/tex] 162,500[tex]$

B. $[/tex]\[tex]$ 162,850$[/tex]

C. [tex]$\$[/tex] 163,100[tex]$

D. $[/tex]\[tex]$ 162,750$[/tex]



Answer :

Let's walk through the steps to calculate the Total Cost of Goods Sold using the provided information:

1. Calculate Net Purchases:
- Purchases: \[tex]$6,500 - Less: Purchase Discounts: \$[/tex]4,500
- Less: Purchase Returns and Allowances: \[tex]$68,000 Net Purchases is calculated by subtracting the purchase discounts and purchase returns and allowances from purchases: \[ \text{Net Purchases} = 6,500 - 4,500 - 68,000 = -66,000 \] 2. Calculate Cost of Goods Purchased: - Net Purchases: \(-\$[/tex]66,000\)
- Add: Freight-in: \[tex]$81,500 Cost of Goods Purchased is calculated by adding freight-in to net purchases: \[ \text{Cost of Goods Purchased} = -66,000 + 81,500 = 15,500 \] 3. Calculate Goods Available for Sale: - Beginning Inventory: \$[/tex]164,000
- Add: Cost of Goods Purchased: \[tex]$15,500 Goods Available for Sale is calculated by adding the beginning inventory to the cost of goods purchased: \[ \text{Goods Available for Sale} = 164,000 + 15,500 = 179,500 \] 4. Calculate Total Cost of Goods Sold: - Goods Available for Sale: \$[/tex]179,500
- Less: Ending Inventory: \[tex]$83,000 Total Cost of Goods Sold is calculated by subtracting the ending inventory from goods available for sale: \[ \text{Total Cost of Goods Sold} = 179,500 - 83,000 = 96,500 \] Therefore, the Total Cost of Goods Sold is $[/tex]\[tex]$96,500$[/tex]. The given choices for the answer do not include [tex]$\$[/tex]96,500$, suggesting an inconsistency in the provided table values that has resulted in erroneous calculations.

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