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    chimeijoan's Avatar
    chimeijoan Posts: 3, Reputation: 1
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    #1

    Feb 9, 2008, 08:35 AM
    Accounting/cost of good sold
    Compute the cost of good sold

    Payment for purchase P 580,000
    Increase in trade accounts payable 50,000
    Decrease in merchandising inventory 20,000
    ddrahota's Avatar
    ddrahota Posts: 6, Reputation: 0
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    #2

    Feb 11, 2008, 07:42 PM
    580,000 is what was paid for purchases so you received 580,000 and on top of that your accounts payable still increased so that says that you did not pay for the order in its entirety i.e. you add the 50,000 to the purchase amount giving you $630,000. Next, your inventory decreased which means that on top of getting $630,000 worth of inventory, your merchandise inventory still decreased meaning you sold a LOT of inventory. Decreases in inventory are added to arrive at Cost of Goods Sold giving you $650,000
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