Acacia Company had inventory of $300,000 on December 31, 20X1.Other information is as follows: $$\begin{array} { | l | r | }
\hline \text { Purchases } & \$ 1,500,000 \
\hline \text { Sales } & 1,800,000 \
\hline \text { Inventory } 1 / 1 / 20 \mathrm { X } 1 & 500,000 \
\hline
\end{array}$$ What is the amount of Acacia's cost of goods sold for 20X1?

Question

Acacia Company had inventory of $300,000 on December 31, 20X1.Other information is as follows: $$\begin{array} { | l | r | } 
\hline \text { Purchases } & \$ 1,500,000 \
\hline \text { Sales } & 1,800,000 \
\hline \text { Inventory } 1 / 1 / 20 \mathrm { X } 1 & 500,000 \
\hline
\end{array}$$ What is the amount of Acacia's cost of goods sold for 20X1?

Quizplus · Accepted Answer

The cost of goods sold equation is:

Cost of goods sold = Beginning inventory + Purchases - Ending inventory

Using the information given:

Beginning inventory = $500,000 
Purchases = $1,500,000 
Ending inventory = $300,000

Cost of goods sold = $500,000 + $1,500,000 - $300,000 = $1,700,000

Therefore, the correct answer is C) $1,700,000.

Acacia Company Had Inventory of $300,000 on December 31, 20X1