Do It Review 55 Cheyenne Lake Corporations accounting record

Do It! Review 5-5 Cheyenne Lake Corporation\'s accounting records show the following at year-end December 31, 2017: Purchase Discounts $6,690 Beginning Inventory Freight-In Freight-Out Purchases $32,160 29,200 11,450 Purchase Returns and Allowances 4,570 9,520 Ending Inventory 163,730 Assuming that Cheyenne Lake Corporation uses the periodic system, compute cost of goods purchased and cost of goods sold. Cost of goods purchased Cost of goods sold

Solution

Answer to 5-5.

Cost of Goods Purchased = Purchases + Freight-in - Purchase Discounts - Purchase Returns and Allowances
Cost of Goods Purchased = $163,730 + $9,520 - $6,690 - $4,570
Cost of Goods Purchased = $161,990

Cost of Goods Sold = Beginning Inventory + Cost of Goods Purchased - Ending Inventory
Cost of Goods Sold = $32,160 + $161,990 - $29,200
Cost of Goods Sold = $164,950