FAD Company uses a periodic inventory system and its inventory records for the period contain the...

Question:

FAD Company uses a periodic inventory system and its inventory records for the period contain the following information:

Beginning inventory (75 units @ $50/unit) $ 3,750

Purchases (150 units @ 50/unit) $ 7,500

Ending inventory (125 units @ $50/unit) $ 6,250

9. Use the information above to answer the following question. What is the amount of cost of goods available for sale?

A. $11,250

B. $17,500

C. $5,000

D. $13,750

Cost of Goods Available for Sale and COGS :

Cost of goods purchased is equals to the sum of cost of the beginning inventory and the cost of goods purchased. Cost of goods available for sale = Beginning Inventory + Purchases. Cost of goods sold = Cost of goods available for sale - Cost of ending inventory. These two calculations are very important in order to determine the net income.

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Cost of Goods Sold on an Income Statement: Definition & Formula

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Chapter 2 / Lesson 10
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Learn the definition of the cost of goods sold and the formula used to calculate it. Also, learn how the cost of goods sold is calculated using examples.


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