Using the second dataset: Beginning inventory 10,000; Purchases 15,500; Ending inventory 9,875. What is the cost of goods sold?

Using the second dataset: Beginning inventory 10,000; Purchases 15,500; Ending inventory 9,875. What is the cost of goods sold?

• A. 15,625
• B. 15,500
• C. 25,500
• D. 10,000

Answer: (A)

COGS is determined by taking the inventory you started with, adding what you purchased during the period, and subtracting what you still have on hand at the end. Here, beginning inventory is 10,000 and purchases are 15,500, so the cost available for sale is 25,500. Subtract the ending inventory of 9,875 to get the cost of goods sold: 25,500 − 9,875 = 15,625. So the cost of goods sold is 15,625. The other figures are the components: 15,500 is the purchases, 10,000 is the beginning inventory, and 25,500 is the total goods available for sale before subtracting ending inventory.

COGS is determined by taking the inventory you started with, adding what you purchased during the period, and subtracting what you still have on hand at the end. Here, beginning inventory is 10,000 and purchases are 15,500, so the cost available for sale is 25,500. Subtract the ending inventory of 9,875 to get the cost of goods sold: 25,500 − 9,875 = 15,625. So the cost of goods sold is 15,625. The other figures are the components: 15,500 is the purchases, 10,000 is the beginning inventory, and 25,500 is the total goods available for sale before subtracting ending inventory.