Question

At the end of Year 1, Voss Company had $8,000 of inventory. During Year 2 the following events occurred: (1) Voss Company purchased $10,000 of inventory with cash. (2) Sold $15,000 of inventory for $20,000 cash to customers. (3) At the end of the year, a physical count of the inventory, it found only $1,000 of inventory on hand. What would Voss Company report for cost of goods sold on the Year 2 income statement?

Answer 1

Answer:

$15,000

Explanation:

Year 2

Opening inventory = $8,000

Purchases = $10,000

Sales = $15,000 (cash received = $20,000)

Inventory count at year end = $1,000

Amount to be written to p/l = 8000 + 10000 - 1000

                                             = $17,000

However, the cost of goods sold is $15,000 while the remaining $2,000 is recognized as inventory write down.