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10 June, 08:34

The trial balance of Sheffield Corp. at the end of its fiscal year, August 31, 2020, includes these accounts: Inventory $19,500; Purchases $156,000; Sales Revenue $193,000; Freight-In $4,350; Sales Returns and Allowances $3,200; Freight-Out $1,700; and Purchase Returns and Allowances $3,000. The ending inventory is $24,500. Prepare a cost of goods sold section for the year ending August 31 (periodic inventory).

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  1. 10 June, 08:46
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    Cost of goods sold $ 152,350

    Explanation:

    Opening Inventory $ 19,500

    Purchases $ 156,000

    Freight in $ 4,350

    Purchase Returns $ (3,000)

    Net Purchases $ 157,350

    Cost of goods available $ 176,850

    Less: Ending Inventory $ (24,500)

    Cost of goods sold $ 152,350

    The sales, sales returns and allowances and freight out are related to the total sales revenue and are thus not considered in the cost of goods sold.
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