Multiple Choice
Which of the following correctly places the steps of the operating cycle for a merchandising company in order?
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5. Inventory
Merchandising Company vs. Manufacturing Company
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Cherokee Incorporated is a merchandiser that provided the following information: Beginning Inventory = $10,000; Purchases = $50,000; Ending Inventory = $8,000. What is the Cost of Goods Sold (COGS) for the period?
A
$52,000
B
$58,000
C
$60,000
D
$48,000
Verified step by step guidance1
Step 1: Understand the formula for Cost of Goods Sold (COGS). The formula is: \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \). This formula calculates the cost of goods that were sold during the period.
Step 2: Identify the values provided in the problem. Beginning Inventory is \( \$10,000 \), Purchases are \( \$50,000 \), and Ending Inventory is \( \$8,000 \).
Step 3: Substitute the values into the formula. Using MathML, the equation becomes: \( \text{COGS} = 10,000 + 50,000 - 8,000 \).
Step 4: Perform the addition first: \( 10,000 + 50,000 \). Then subtract the Ending Inventory \( 8,000 \) from the result.
Step 5: The final value obtained after performing the calculations will be the Cost of Goods Sold (COGS) for the period.
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