At 1 July 2015,Epsilon Pty Ltd had 100 items of inventory which had cost $50 each.During the year ended 30 June 2016,it purchased 1500 items at a cost of $50 each.Of these,200 were returned to the supplier as they were damaged.During the year,1200 items were sold for $80 each,but 50 were returned by customers.Overhead expenses during the year amounted to $15 000.
-What was Epsilon Pty Ltd's cost of goods sold for the year?

Question

Quizplus · Accepted Answer

Cost of goods sold can be calculated as follows:

Beginning inventory: 100 items × $50 = $5,000
Purchases: (1,500 items - 200 returned) × $50 = $70,000
Goods available for sale: $5,000 + $70,000 = $75,000
Ending inventory: (1,150 items - 50 returned) × $50 = $57,500
Cost of goods sold: $75,000 - $57,500 = $17,500 + $15,000 (overhead expenses) = $32,500
Therefore, the correct answer is B.

At 1 July 2015,Epsilon Pty Ltd Had 100 Items of Inventory