applying the cost of goods sold model\nthe following amounts were obtained from the accounting records of…

applying the cost of goods sold model\nthe following amounts were obtained from the accounting records of steed company:\nrequired:\ncompute the missing amounts.\n\nyear 1 year 2 year 3\nbeginning inventory $11,600 $ $ \nnet purchases $61,300 56,100\nending inventory 11,200 13,750\ncost of goods sold 44,500 49,800 \n

applying the cost of goods sold model\nthe following amounts were obtained from the accounting records of steed company:\nrequired:\ncompute the missing amounts.\n\nyear 1 year 2 year 3\nbeginning inventory $11,600 $ $ \nnet purchases $61,300 56,100\nending inventory 11,200 13,750\ncost of goods sold 44,500 49,800 \n

Answer

Explanation:

Step1: Recall the Cost of Goods Sold formula

The formula for Cost of Goods Sold (COGS) is (COGS=\text{Beginning inventory}+\text{Net purchases}-\text{Ending inventory}).

Step2: Calculate Net purchases for Year 1

For Year 1, we know (COGS = 44500), (\text{Beginning inventory}=11600), (\text{Ending inventory}=11200). Using the formula (COGS=\text{Beginning inventory}+\text{Net purchases}-\text{Ending inventory}), we can solve for (\text{Net purchases}). Rearrange the formula to (\text{Net purchases}=COGS+\text{Ending inventory}-\text{Beginning inventory}) (\text{Net purchases}=44500 + 11200-11600) (\text{Net purchases}=44100)

Step3: Calculate Beginning inventory for Year 2

For Year 2, assume (\text{Beginning inventory}=x), (\text{Net purchases}=61300), (\text{Ending inventory}=y), (COGS = 49800). We also know that the ending inventory of Year 1 is the beginning inventory of Year 2. But we can use the formula directly. (49800=x + 61300-y). But we can also use the fact that if we assume no other relations (using the formula structure). Wait, no, we can use the formula (COGS=\text{Beginning inventory}+\text{Net purchases}-\text{Ending inventory}). Rearranging for (\text{Beginning inventory}) (if we assume we know (COGS), (\text{Net purchases}) and (\text{Ending inventory}) relations. Wait, no, we need to assume that the ending inventory of Year 1 is the beginning inventory of Year 2. But actually, we can use the formula. Let's assume we use the formula for each year independently. For Year 2, assume we know (COGS = 49800), (\text{Net purchases}=61300). Let the beginning inventory be (x) and ending inventory be (y). But if we assume that we can use the formula (x=COGS + y-\text{Net purchases}). But we need another relation. Wait, no, actually, if we assume that we use the formula for each year. For Year 1 we found net - purchases. For Year 2, assume we use the formula (COGS=\text{Beginning inventory}+\text{Net purchases}-\text{Ending inventory}). But we need to assume that the ending inventory of Year 1 is the beginning inventory of Year 2. Wait, no, the problem is separate for each year. Wait, no, actually, for Year 2: Let (x) be the beginning inventory. (49800=x + 61300-\text{Ending inventory}). But we can't solve this. Wait, no, there is a mistake. Wait, the formula is correct. But we need to assume that for each year, we can use the formula. For Year 1: (44500=11600+\text{Net purchases}-11200), so (\text{Net purchases}=44100) (as above) For Year 2: Assume we know (COGS = 49800), (\text{Net purchases}=61300). Let the beginning inventory be (x) and ending inventory be (y). But we have two variables. Wait, no, there is a mis - understanding. The formula is for each year: (COGS=\text{Beginning inventory}+\text{Net purchases}-\text{Ending inventory}) For Year 2: If we assume that we can find the beginning inventory (assuming that the ending inventory of Year 1 is the beginning inventory of Year 2. But the problem does not state that the years are consecutive in a company - wide inventory sense. But in accounting, usually, the ending inventory of one period is the beginning inventory of the next. So beginning inventory of Year 2 is (11200) (ending inventory of Year 1) Then for Year 2: (49800=11200 + 61300-\text{Ending inventory}) (\text{Ending inventory}=11200 + 61300-49800=22700)

Step4: Calculate Cost of Goods Sold for Year 3

For Year 3, assume the beginning inventory is the ending inventory of Year 2 ((22700)), (\text{Net purchases}=56100), (\text{Ending inventory}=13750) Using the formula (COGS=\text{Beginning inventory}+\text{Net purchases}-\text{Ending inventory}) (COGS=22700+56100 - 13750) (COGS=65050)

Answer:

  • Year 1 Net purchases: ($44100)
  • Year 2 Beginning inventory: ($11200), Year 2 Ending inventory: ($22700)
  • Year 3 Beginning inventory: ($22700), Year 3 Cost of goods sold: ($65050)