At December 31, 2020, Tito's Mercantile has Cost of Goods Sold of $50,000 before adjusting entries are recorded. The physical count of inventory indicates that the actual inventory amount is $1,200 less than the balance in the Inventory account. What balance will the company report for Cost of Goods Sold on the 2020 income statement?

Question

Quizplus · Accepted Answer

The inventory is $1,200 less than recorded, meaning an additional $1,200 needs to be added to the Cost of Goods Sold to account for the discrepancy. Therefore, the adjusted Cost of Goods Sold is $50,000 + $1,200 = $51,200.

At December 31, 2020, Tito's Mercantile Has Cost of Goods