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	32,300
Sales			383,000
Sales returns	12,300
Purchases	243,000
Purchase discounts			6,300
Purchase returns			10,300
Freight-in	17,600

In addition, you determine that the June 30, 2018, inventory balance is $40,300.

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 1

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

Beginning inventory		32300
Purchase	243000
Less: Purchase discount	(6300)
Less: Purchase returns	(10300)
Add: Freight in	17600
Net purchase		244000
Cost of goods available for sale		276300
Less: Ending inventory		(40300)
Cost of goods sold		236000

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

Date	accounts & explanation	debit	credit
June 30,2018	Cost of goods sold	236000
	Inventory (ending)	40300
	Inventory (beginning)		32300
	Purchases		244000
	(To record adjusting entry)