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Determining Cost of Goods Sold. The cost of goods sold is the difference between (1)...

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Accounting

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Determining Cost of Goods Sold. The cost of goods sold is the difference between (1) the cost of goods available for sale during the period, and (2) the cost of goods on hand at the end of the period. The basic inventory equation: Beginning inventory + Purchases - Ending Inventory = Cost of Goods Sold Remember: the ending inventory of one period is the beginning inventory of the next period. Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 50 units that cost $34 each. During June, the company purchased 150 units at $34 each, returned 6 units for credit, and sold 125 units at $50 each. Journalize the June transaction. Determine the goods and costs included in inventory Goods and Costs Included in Inventory. Technically, purchases should be recorded when legal title passes to the buyer. The following items require careful judgment: 1. Goods in Transit: If the goods are shipped f.o.b. shipping point, title passes to the buyer when the seller delivers the goods to the common carrier. If the goods are shipped f.o.b. destination, title passes when the buyer receives the goods (i.e. when the goods reach their destination)

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