Multiple Choice
A company uses the periodic inventory system. Beginning inventory is $5,000, purchases during the period are $12,000, and ending inventory is $4,000. What is the cost of goods sold (COGS) for the period?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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A company uses a perpetual inventory system. At the beginning of the year, inventory was $10,000. During the year, purchases amounted to $25,000, and sales totaled $40,000. At year-end, the inventory count showed $8,000. What is the cost of goods sold (COGS) for the year?
A
$27,000
B
$33,000
C
$35,000
D
$23,000
Verified step by step guidance1
Step 1: Understand the formula for calculating Cost of Goods Sold (COGS) in a perpetual inventory system. The formula is: \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \).
Step 2: Identify the values provided in the problem. Beginning Inventory = $10,000, Purchases = $25,000, Ending Inventory = $8,000.
Step 3: Substitute the values into the formula: \( \text{COGS} = 10,000 + 25,000 - 8,000 \).
Step 4: Perform the addition and subtraction operations step by step. First, add Beginning Inventory and Purchases: \( 10,000 + 25,000 \). Then subtract Ending Inventory from the result: \( 35,000 - 8,000 \).
Step 5: The result of the calculation will give you the Cost of Goods Sold (COGS) for the year. Compare this value to the provided answer choices to determine the correct option.
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