Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Sign up and see all textbooks for free! Illustration

Q35PGB_3

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 371

Answers without the blur.

Just sign up for free and you're in.

Illustration

Short Answer

Some of L and K Electronics’s merchandise is gathering dust. It is now December 31, 2018, and the current replacement cost of the ending merchandise inventory is$32,000 below the business’s cost of the goods, which was $98,000. Before any adjustmentsat the end of the period, the company’s Cost of Goods Sold account has a balanceof $410,000.

Requirements

3. At what amount should the company report cost of goods sold on the incomestatement?

COGS would be reported for $476,000 in the income statement.

See the step by step solution

Step by Step Solution

Step1: Cost of goods sold

The cost of goods sold is the direct material cost incurred for producing goods or services. This direct material cost includes raw material cost, transportation cost, installation cost, and any other value reduction in the inventory in the normal course of business.

Step 2: COGS on the income statement

In the given case, the COGS has already been given at the value of $410,000. But there is a loss in inventory value due to the LCM rule. This loss has been adjusted to COGS in the previous sub-part.

So the new value of COGS to be reported on the balance sheet would be –

Most popular questions for Business-studies Textbooks

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.