The following information is available for Excelsior Corp for 2020: $\begin{array}{llcc}
\text { Payment for goods during year................................. } &\$104,000 \
\text { Accounts payable, beginning ................................... } &14,000\
\text {Inventory, beginning ................................................. } &28,000\
\text { Accounts payable, ending........................................ } &12,600\
\text { Inventory, ending.................................................... } &16,200\
\end{array}$

Cost of goods sold for 2020 is
A) $102,600.
B) $132,000.
C) $105,400.
D) $114,400.

Question

The following information is available for Excelsior Corp for 2020: $\begin{array}{llcc}
  \text { Payment for goods during year................................. } &\$104,000  \
 \text { Accounts payable, beginning ................................... } &14,000\
 \text {Inventory, beginning .................................................  } &28,000\
 \text { Accounts payable, ending........................................ } &12,600\
 \text { Inventory, ending.................................................... } &16,200\
\end{array}$

Cost of goods sold for 2020 is
A) $102,600.
B) $132,000.
C) $105,400.
D) $114,400.

Quizplus · Accepted Answer

The formula for calculating Cost of Goods Sold (COGS) is:

COGS = Beginning Inventory + Purchases - Ending Inventory

We are given:

Payment for goods during year (i.e. Purchases) = $104,000
Accounts payable, beginning = $14,000
Inventory, beginning = $28,000
Accounts payable, ending = $12,600
Inventory, ending = $16,200

Using these values, we can calculate:

Purchases = Payment for goods during year + Accounts payable, ending - Accounts payable, beginning
Purchases = $104,000 + $12,600 - $14,000 = $102,600

Beginning Inventory = $28,000
Ending Inventory = $16,200

Therefore:

COGS = Beginning Inventory + Purchases - Ending Inventory
COGS = $28,000 + $102,600 - $16,200 = $114,400

Therefore, the correct answer is (D) $114,400.

The Following Information Is Available for Excelsior Corp for 2020