For the current year, Heedy's Department Store reported the following data: $\begin{array} { | l | r | }
\hline \text { Goods available for sale } & \$ 1,074,450 \
\hline \text { December } 31 , \text { inventory balance } & 85,430 \
\hline
\end{array}$ The current net realizable value of the inventory on the balance sheet date is $91,730. Using the lower-of-cost-and-net-realizable-value rule, what is cost of goods sold for Heedy's Department Store?

Question

For the current year, Heedy's Department Store reported the following data: $\begin{array} { | l | r | } 
\hline \text { Goods available for sale } & \$ 1,074,450 \
\hline \text { December } 31 , \text { inventory balance } & 85,430 \
\hline
\end{array}$ The current net realizable value of the inventory on the balance sheet date is $91,730. Using the lower-of-cost-and-net-realizable-value rule, what is cost of goods sold for Heedy's Department Store?

Quizplus · Accepted Answer

The cost of goods sold is calculated as goods available for sale minus the lower of cost or net realizable value of the ending inventory. Here, the lower value is $85,430, so COGS = $1,074,450 - $85,430 = $989,020.

For the Current Year, Heedy's Department Store Reported the Following