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Clean Lake Corporation's accounting records show the following at year-end December 31, 2022:

| Item | Amount |
|--------------------------------------|-----------|
| Purchase Discounts | [tex]$5,900 |
| Beginning Inventory | $[/tex]31,720 |
| Freight-In | [tex]$8,400 |
| Ending Inventory | $[/tex]27,950 |
| Freight-Out | [tex]$11,100 |
| Purchase Returns and Allowances | $[/tex]3,600 |
| Purchases | [tex]$162,500 |

Assuming that Clean Lake Corporation uses the periodic system, compute the following:

Cost of goods purchased: $[/tex] __________

Cost of goods sold: $ __________



Answer :

GinnyAnswer
To compute the cost of goods purchased and the cost of goods sold, we need to follow a systematic approach using the provided financial data. Here is how the calculations work step-by-step:

1. Calculate the Cost of Goods Purchased:
- Purchases: \[tex]$162,500 - Less: Purchase Discounts: \$[/tex]5,900
- Less: Purchase Returns and Allowances: \[tex]$3,600 - Add: Freight-In: \$[/tex]8,400

[tex]\[ \text{Cost of Goods Purchased} = (\text{Purchases}) - (\text{Purchase Discounts}) - (\text{Purchase Returns and Allowances}) + (\text{Freight-In}) \][/tex]

Plugging in the numbers, we get:

[tex]\[ \text{Cost of Goods Purchased} = 162,500 - 5,900 - 3,600 + 8,400 = 161,400 \][/tex]

2. Calculate the Cost of Goods Sold:
- Beginning Inventory: \[tex]$31,720 - Add: Cost of Goods Purchased: \$[/tex]161,400 (computed above)
- Less: Ending Inventory: \[tex]$27,950 \[ \text{Cost of Goods Sold} = (\text{Beginning Inventory}) + (\text{Cost of Goods Purchased}) - (\text{Ending Inventory}) \] Plugging in the numbers, we get: \[ \text{Cost of Goods Sold} = 31,720 + 161,400 - 27,950 = 165,170 \] Therefore, the calculations yield the following results: - Cost of Goods Purchased: $[/tex]161,400
- Cost of Goods Sold: $165,170

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