Question

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	32,400
Sales			384,000
Sales returns	12,400
Purchases	244,000
Purchase discounts			6,400
Purchase returns			10,400
Freight-in	17,800

In addition, you determine that the June 30, 2018, inventory balance is $40,400.

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.

Prepare the year-end adjusting entry to record cost of goods sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1.

Cost of goods sold

$ 2,37,000.00

Working:

Beginning inventory	$     32,400.00
Add: Purchases	$ 2,44,000.00
Less: Purchase discounts	$      -6,400.00
Less: Purchases returns	$    -10,400.00
Add: Freight-in	$     17,800.00
Cost of goods available for sale	$ 2,77,400.00
Less: Ending inventory	$    -40,400.00
Cost of goods sold	$ 2,37,000.00

2.

Sr. No.	Account Title	Debit	Credit
1	Cost of goods sold	$ 2,37,000.00
	Inventory (Ending)	$     40,400.00
	Purchase returns	$     10,400.00
	Purchase discounts	$       6,400.00
	Inventory (beginning)		$     32,400.00
	Purchases		$ 2,44,000.00
	Freight-in		$     17,800.00
	(To record year-end adjusting entry to record cost of goods sold)