An operation's Beginning Inventory for an accounting period equaled $15,000. Ending Inventory for the period equaled $14,000, Purchases equaled $21,500 and Total Cost of Sales was $21,000. What was the amount of this operation's Employee Meals in the period?

Question

Quizplus · Accepted Answer

The calculation for the cost of goods sold (COGS) is Beginning Inventory + Purchases - Ending Inventory. In this case, it's $15,000 + $21,500 - $14,000 = $22,500. The Total Cost of Sales is $21,000, which includes COGS and Employee Meals. Therefore, Employee Meals = Total Cost of Sales - COGS = $21,000 - $22,500 = -$1,500. Since Employee Meals cannot be a negative expense, it indicates an error in the calculation approach. Correctly, Employee Meals are the difference between the calculated COGS and the Total Cost of Sales provided, which means Employee Meals = $22,500 - $21,000 = $1,500.

An Operation's Beginning Inventory for an Accounting Period Equaled $15,000