Multiple Choice
If 3 bananas cost \$0.99, what is the cost of goods sold (COGS) for 12 bananas under both perpetual and periodic inventory systems, assuming all 12 bananas are sold at the same rate?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
Multiple Choice
Which of the following sets of values are necessary to compute Cost of Goods Sold (COGS) under the periodic inventory system?
A
Beginning inventory, sales discounts, and freight-in
B
Sales revenue, purchase returns, and ending inventory
C
Beginning inventory, purchases, and ending inventory
D
Purchases, sales returns, and accounts receivable
Verified step by step guidance1
Understand the concept of Cost of Goods Sold (COGS) under the periodic inventory system. COGS represents the cost of inventory sold during a specific period and is calculated using the formula: \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \).
Identify the components required for the calculation. The formula requires three key values: Beginning Inventory (the value of inventory at the start of the period), Purchases (the cost of inventory acquired during the period), and Ending Inventory (the value of inventory remaining at the end of the period).
Eliminate irrelevant values from the options provided. For example, sales discounts, sales revenue, purchase returns, and accounts receivable are not directly involved in the calculation of COGS under the periodic inventory system.
Focus on the correct set of values: Beginning Inventory, Purchases, and Ending Inventory. These are the necessary components to compute COGS accurately under the periodic inventory system.
Apply the formula \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \) using the identified values to calculate the Cost of Goods Sold for the period.
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