Dot .Ice cream Inc. purchased inventory for his ice cream shop in August 2009 for $80,000 cash to sell in August and September. The company sold inventory that cost $33,000 in August and the remainder in September. What is the cost of goods sold for August 2009 and the cost of goods sold for September 2009 if Dot uses GAAP? What is the cost of goods sold for each month if Dot uses cash basis accounting?
Cash basis accounting:
On the cash basis of accounting, only cash transactions are recorded in books of accounts. According to this basis of accounting, the transaction is made when cash received or paid, no credit transactions are recorded.
Answer and Explanation: 1
According to GAAP
The cost of goods sold for august is 33,000 and the cost of goods sold for September is 47,000 (80,000-33,000).
According to cash...
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fromChapter 3 / Lesson 13
The cost of goods is the expenses used to produce products, provide services, or acquire inventory. Study the definition of cost of goods and how to calculate it in this lesson.