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    smokedetector's Avatar
    smokedetector Posts: 368, Reputation: 56
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    #1

    Jun 12, 2008, 05:59 AM
    Cost of Goods Sold
    I am having a hard time with this problem. I have to solve for each letter, and this is what it gives me:

    merchandise inventory (beg) - I
    Purchases - 338
    Purchase Returns and Allowances - j
    freight-in - 58
    net cost of purchases - k
    goods available for sale - 424
    merchandise inventory (end) - L
    COGS - 358

    COGS is cost of goods available for sale - merchandise inventory (end), so 424-L=358. L then is 66.
    Now in order to get goods available for sale (424), you take merchandise inventory (end) + net cost of purchase, so I+k=424.
    In order to get Net cost of purchases, you have to take purchases, subtract returns and allowances, and add freight-in. 338-j+58=k. Simplified, its 396-j=k.
    How do you solve for that?

    I+(396-j)=424
    I-j=28


    it also gives me the rest of the income statement, but I don't think that helps much here since I'm only having trouble with the COGS part of this question.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #2

    Jun 12, 2008, 06:52 PM
    With the given information, there isn't any way to solve it, since you end up with two variables.

    I don't see what else would be available on the income statement to help, since nothing else on there affects this, and the inventory is a balance sheet account. The only other thing would be if you had last year's balance sheet, which would have ending inventory, which is this year's beginning inventory.

    Otherwise, I don't see a way to solve it.
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