Multiple Choice
Which financial statement is characterized by the formula: revenues $-\,$ cost of goods sold $-\,$ expenses $=\,$ net income?
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4. Merchandising Operations
Single-step Income Statement
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A company started the year with $10,000 in inventory, purchased $25,000 of additional inventory during the year, and ended the year with $8,000 in inventory. Using a single-step income statement, what is the company's cost of goods sold (COGS) for the year?
A
$33,000
B
$23,000
C
$35,000
D
$27,000
Verified step by step guidance1
Step 1: Understand the formula for calculating Cost of Goods Sold (COGS). The formula is: \( \text{COGS} = \text{Beginning Inventory} + \text{Purchases} - \text{Ending Inventory} \).
Step 2: Identify the values provided in the problem. Beginning Inventory is $10,000, Purchases are $25,000, and Ending Inventory is $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 in the formula. First, add Beginning Inventory and Purchases, then subtract Ending Inventory.
Step 5: The result from the calculation will give you the company's Cost of Goods Sold (COGS) for the year.
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