Waco Company's Cost of Goods Sold for 2014 was $302,000. Which of the following statements is true?

Question

Quizplus · Accepted Answer

The formula for Cost of Goods Available for Sale is Beginning Inventory + Net Purchases.

So,

Cost of Goods Available for Sale = Beginning Inventory + Net Purchases
Therefore,

Net Purchases = Cost of Goods Available for Sale - Beginning Inventory

We are given the Cost of Goods Sold as $302,000. We also know that Cost of Goods Sold = Beginning Inventory + Net Purchases - Ending Inventory.

Therefore,

$302,000 = Beginning Inventory + Net Purchases - $100,000
Net Purchases = $402,000

Thus, the Cost of Goods Available for Sale is $402,000 if the ending balance in Merchandise Inventory for 2014 was $100,000.

Waco Company's Cost of Goods Sold for 2014 Was $302,000