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Q16-6SE

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Horngren'S Financial And Managerial Accounting
Found in: Page 887

Short Answer

Computing cost of goods sold, merchandising company

Use the following information for The Windshield Helper, a retail merchandiser of auto windshields, to compute the cost of goods sold:

Web Site Maintenance $ 7,900

Delivery Expense 400

Freight In 2,400

Purchases 47,000

Ending Merchandise Inventory 5,500

Revenues 63,000

Marketing Expenses 10,700

Beginning Merchandise Inventory 8,600

The cost of goods is computed as $52,500

See the step by step solution

Step by Step Solution

Definition of COGS

COGS stands for the Cost Of Goods Sold. It refers to the number of goods that are sold to the customers.

Computation of COGS

Computation of Cost of goods sold

COGS

Amount ($)

Beginning Merchandise Inventory

$8,600

Purchase and freight in (47,000+2,400)

$49,400

Cost of goods available for sale

$58,000

Ending Merchandise Inventory

-$5,500

Cost of goods sold

$52,500

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