This year, Yuan started a business selling computer parts both in-store and online. He purchased via credit card, $60,000 of goods during the year. His ending inventory was $9,000. For tax purposes, Yuan adopted the cash method and the treatment of inventory as deductible when purchased per his books. His deduction for inventory for the year is:
A) $51,000.
B) $60,000.
C) $69,000.
D) None of the above.

Question

Quizplus · Accepted Answer

Since Yuan adopted the treatment of inventory as deductible when purchased per his books, he can deduct the cost of goods sold (COGS) as the difference between the beginning inventory and ending inventory for the year. Therefore, the deduction for inventory for the year is $60,000 (COGS) = $60,000 (purchased) - $9,000 (ending inventory).

This Year, Yuan Started a Business Selling Computer Parts Both