Question

5 Based upon the following data, determine the cost of merchandise sold for May Merchandise Inventory, May 1 $132,200 152,000 875,000 20,000 Merchandise Inventory, May 31 Purchases Purchases Discounts Transportation In 15,300 (10 percent)

Answer 1

Cost of purchases = Purchases – Purchases discount + Transportation In

                              = $ 875,000 - $ 20,000 + $ 15,300 = $ 870,300

Cost of merchandise sold = Cost of purchases + Beginning merchandise inventory – Ending merchandise inventory

= $ 870,300 + $ 132,200 - $ 152,000 = $ 850,500

Cost of merchandise sold for May is $ 850,500