A corporation compiled the information given below for their auditor. The corporation uses a periodic inventory system. $\begin{array} { | l | l | l | }
\hline & 2001 & 2002 \
\hline \text { Purchases } & \$ 240 & \$ 160 \
\hline \text { Goods out on consignment } & 0 & 80 \
\hline \text { Beginning inventory } & 900 & ? \
\hline \text { Ending inventory } & ? & ? \
\hline \text { Physical inventory count } & \text { Unavailable } & 240 \
\hline \text { Cost of goods sold } & 360 & ? \
\hline
\end{array}$
What was the amount of cost of goods sold for 2002?
A) $620
B) $700
C) $780
D) $900

Question

A corporation compiled the information given below for their auditor. The corporation uses a periodic inventory system. $\begin{array} { | l | l | l | } 
\hline & 2001 & 2002 \
\hline \text { Purchases } & \$ 240 & \$ 160 \
\hline \text { Goods out on consignment } & 0 & 80 \
\hline \text { Beginning inventory } & 900 & ? \
\hline \text { Ending inventory } & ? & ? \
\hline \text { Physical inventory count } & \text { Unavailable } & 240 \
\hline \text { Cost of goods sold } & 360 & ? \
\hline
\end{array}$
 What was the amount of cost of goods sold for 2002?
A) $620
B) $700
C) $780
D) $900

Quizplus · Accepted Answer

The cost of goods sold (COGS) for 2002 can be calculated using the formula: Beginning Inventory + Purchases - Ending Inventory = COGS. The beginning inventory for 2002 is the ending inventory of 2001, which can be calculated as $900 (beginning inventory of 2001) + $240 (purchases in 2001) - $360 (COGS in 2001) = $780. For 2002, the ending inventory is the physical inventory count of $240. Therefore, COGS for 2002 is $780 (beginning inventory) + $160 (purchases) - $240 (ending inventory) = $700.

A Corporation Compiled the Information Given Below for Their Auditor