The following information was derived from the 2020 accounting records of Jersey Co.: $\begin{array}{c}
\begin{array}{lll}
\
\
\text {Beginning inventory}\
\text {Purchases}\
\text {Freight-in}\
\text {Transportation to consignees}\
\text {Freight-out}\
\text {Ending inventory}
\end{array}
\begin{array}{c}
\text {Jersey's Central Warehouse}\
\$ 260,000 \
475,000 \
15,000 \
\
25,000 \
290,000
\end{array}
\begin{array}{lll}
\text {Jersey's Goods}\
\text {held by consignee}\
\$ 28,000 \
90,000\
\
5,000\
8,000\
20,000
\end{array}
\end{array}$
Jersey's 2020 cost of sales was
A) $563,000.
B) $558,000.
C) $488,000.
D) $460,000.

Question

The following information was derived from the 2020 accounting records of Jersey Co.: $\begin{array}{c}
\begin{array}{lll}
\
\
 \text {Beginning inventory}\
 \text {Purchases}\
 \text {Freight-in}\
 \text {Transportation to consignees}\
 \text {Freight-out}\
 \text {Ending inventory}
\end{array}
\begin{array}{c}
 \text {Jersey's Central Warehouse}\
\$ 260,000 \
475,000 \
15,000 \
\
25,000 \
290,000
\end{array}
\begin{array}{lll}
 \text {Jersey's Goods}\
 \text {held by consignee}\
\$ 28,000 \
90,000\
\
5,000\
8,000\
20,000
\end{array}
\end{array}$
 Jersey's 2020 cost of sales was
A) $563,000.
B) $558,000.
C) $488,000.
D) $460,000.

Quizplus · Accepted Answer

The correct answer is A because the cost of sales is calculated as beginning inventory plus purchases plus freight-in minus ending inventory. In this case, the cost of sales is $260,000 + $475,000 + $15,000 - $290,000 = $563,000.

The Following Information Was Derived from the 2020 Accounting Records