Question

Computing cost of goods sold, merchandising company

Use the following information for The Windshield Helper, a retail merchandiser of auto windshields, to compute the cost of goods sold:

Web Site Maintenance $ 7,900

Delivery Expense 400

Freight In 2,400

Purchases 47,000

Ending Merchandise Inventory 5,500

Revenues 63,000

Marketing Expenses 10,700

Beginning Merchandise Inventory 8,600

Short answer

The cost of goods is computed as $52,500

Step-by-step solution

Definition of COGS

COGS stands for the Cost Of Goods Sold. It refers to the number of goods that are sold to the customers.

Computation of COGS

Computation of Cost of goods sold
COGS	Amount ($)
Beginning Merchandise Inventory	$8,600
Purchase and freight in (47,000+2,400)	$49,400
Cost of goods available for sale	$58,000
Ending Merchandise Inventory	-$5,500
Cost of goods sold	$52,500