Find the net sales and cost of goods sold

Mathematics
Tutor: None Selected Time limit: 1 Day

For the month ending December 31, MidState Machinery had gross sales of $4,207,000, returns of $68,800, cost of beginning inventory $502,000, cost of purchases $1,484,000, cost of ending inventory $570,000, total operating expenses $135,900.

Jul 10th, 2015

Thank you for the opportunity to help you with your question!

Gross Sales = $ 4,207,000

Less Returns = $ 68,800

Net Sales = $ 4,207,000 - $ 68,800 = 

$4,138,200
Cost of Goods Sold

Opening inventory 502,000
Add: Purchases 1,484,000
Less: closing inventory 135,900
Cost of Goods Sold 1,850,100

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 10th, 2015

Thank you very much for your guidance. I was able to achieve the same result for the net sales, however I am confused with the cost of good sold. The potential answers that we were given are: $1,416,000   $135,900  and $2,716,300. I have worked this problem several times and cannot come up with any of those numbers (other than going with the total operating expenses. Can you please clarify? Thank you.

Jul 10th, 2015

Hi,

I am a Chartered Accountant with numerous years of experience in online coaching, though I am new to StudyPool.

The cost of goods sold is only calculated as above. Operating expenses comes later as a reduction from COGS to arrive at Net Profit.

Thank you.

Jul 10th, 2015

Ok, thank you. The actual cost for the closing inventory was $570,000. So, when I replaced the $135,900 and used your formula, I came up with $1,416,000 which makes sense. Thank you, again and have a great day.

Jul 10th, 2015

Great. I look forward to working with you in future.

Jul 10th, 2015

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