A company has an inventory of $50,000 at the beginning of the year and purchases an additional $20,000. If the ending inventory is $30,000, what is the cost of goods sold?

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$40,000
$50,000
$60,000
$70,000

Questions & Step-by-step Solutions

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Q: A company has an inventory of $50,000 at the beginning of the year and purchases an additional $20,000. If the ending inventory is $30,000, what is the cost of goods sold?

Solution: COGS = Beginning Inventory + Purchases - Ending Inventory = $50,000 + $20,000 - $30,000 = $40,000.

Steps: 8

Step 1: Identify the beginning inventory, which is $50,000.
Step 2: Identify the purchases made during the year, which is $20,000.
Step 3: Identify the ending inventory, which is $30,000.
Step 4: Use the formula for Cost of Goods Sold (COGS): COGS = Beginning Inventory + Purchases - Ending Inventory.
Step 5: Plug in the numbers: COGS = $50,000 + $20,000 - $30,000.
Step 6: Calculate the total: $50,000 + $20,000 = $70,000.
Step 7: Subtract the ending inventory from the total: $70,000 - $30,000 = $40,000.
Step 8: The Cost of Goods Sold (COGS) is $40,000.

A company has an inventory of $50,000 at the beginning of the year and purchases an additional $20,000. If the ending inventory is $30,000, what is the cost of goods sold?

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