Bisi Manufacturing Company provided the following balances extracted from its accounting records at the end of the year:
| Financial Item | Amount (\text{N}) |
|---|---|
| Opening inventory of finished goods | 15,000 |
| Cost of production | 80,000 |
| Closing inventory of finished goods | 20,000 |
| Carriage outwards | 5,000 |
What is the cost of goods sold for the period?
- \text{N}75,000Answer
- B\text{N}80,000
- C\text{N}115,000
- D\text{N}85,000
Answer
\text{N}75,000
In the Trading Account of a manufacturing entity, Cost of Goods Sold is obtained by adding the cost of production to the opening inventory of finished goods and subtracting the closing inventory of finished goods: \text{N}15,000 + \text{N}80,000 - \text{N}20,000 = \text{N}75,000. Carriage outwards is a distribution expense placed in the Profit and Loss Account.
Step-by-Step Solution
Key Concept
Calculation of Cost of Goods Sold for Manufacturing Entities
Estimated Time:45s