Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the year. Below is a list of all the jobs for the quarter: Jobs 356, 357, 358, and 359 were completed. Jobs 356 and 357 were sold at a profit of $500 on each job.
What is the ending balance of Cost of Goods Sold for Adams Company at the end of the first quarter?

Question

Adams Company is a manufacturing company that has worked on several production jobs during the first quarter of the year.  Below is a list of all the jobs for the quarter:  Jobs 356, 357, 358, and 359 were completed.  Jobs 356 and 357 were sold at a profit of $500 on each job.
What is the ending balance of Cost of Goods Sold for Adams Company at the end of the first quarter?

Quizplus · Accepted Answer

Since jobs 356 and 357 were sold at a profit of $500 each, the total profit earned is $1000. This profit is deducted from the total cost of goods sold for all the jobs completed during the quarter. The cost of goods sold for jobs 356, 357, 358 and 359 is not given, so we cannot calculate the exact ending balance of cost of goods sold. However, we know that the ending balance will be less than the total cost of goods sold for all four jobs, which is $2,685 (assuming all four jobs had a cost of goods sold). Therefore, the best choice is C, $1,685, which is less than the maximum possible value for the ending balance of cost of goods sold.

Adams Company Is a Manufacturing Company That Has Worked on Several