How do i find the cost of goods sold

Question

ScanSolve AI Tutor · Accepted Answer

To find the Cost of Goods Sold (COGS), you need to consider your inventory levels and purchases during the period.

The formula for Cost of Goods Sold is:

\text{Cost of Goods Sold} = \text{Opening Inventory} + \text{Purchases} - \text{Closing Inventory}

Identify the value of your Opening Inventory, which is the inventory on hand at the beginning of the accounting period.
Determine the total Purchases made during the accounting period.
This includes the cost of all goods bought for resale.
Identify the value of your Closing Inventory, which is the inventory remaining on hand at the end of the accounting period.
Add the Opening Inventory to the Purchases, then subtract the Closing Inventory to get the Cost of Goods Sold.
For example, if a business has:
Opening Inventory = $20,000
Purchases = $80,000
Closing Inventory = $15,000

$\text{Cost of Goods Sold} = \$20,000 + \$80,000 - \$15,000$ $\text{Cost of Goods Sold} = \$100,000 - \$15,000$ $\text{Cost of Goods Sold} = \boxed{\$85,000}$

Answer