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Askew Company uses a periodic inventory system.

The June 30, 2018, year-end trial balance for the company contained the following information:

Account Debit Credit
Merchandise inventory, 7/1/17 32,900
Sales 389,000
Sales returns 12,900
Purchases 249,000
Purchase discounts 6, 900
Purchase returns 10, 900
Freight-in 18,800
In addition, you determine that the June 30, 2018, inventory balance is $40,900

Required:

1. Calculate the cost of goods sold for the Askew Company for the year ending June 30, 2018.

2. Prepare the year-end adjusting entry to record cost of goods sold.

Answer :

Answer:

1. $242,000

Explanation:

(a) Net purchases:

= Purchases - Purchase discount - Purchase return + Freight - in

= 249,000 - 6,900 - 10,900 + 18,800

= 250,000

Cost of goods available for sale:

= Beginning inventory + Net purchases

= 32,900 + 250,000

= 282,900

Cost of goods sold:

= Cost of goods available for sale - Ending inventory

= $282,900 - $40,900

= $242,000

2. The journal entry is as follows:

Cost of goods sold A/c  Dr. $242,000

Ending inventory A/c      Dr. $40,900

Purchase discounts A/c Dr. $6,900

Purchase returns A/c      Dr. $10,900

         To beginning inventory                  $32,900

         To Purchases                                  $249,000

         To Freight - in                                 $18,800

(To record the cost of goods sold)

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