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Costs of Goods Sold

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Cost of Goods Sold

Theresa Gillette

XACC/290 - PRINCIPLES OF ACCOUNTING I

November 9, 2014

Instructor: RASHAD ABDULLAH

Cost of Goods Sold

As an example of how it would be done I have added a diagram showing how you would process the cost of the goods sold. First you need to have the cost of the beginning inventory then you have to add the amount of the purchases and subtract the ending amount of the inventory. When everything is said and done it equals out to the cost of the goods that have been sold. Cost of goods sold is the accumulated total of all the costs used to create a product or service in this case it is which has been sold. All of these costs fall into a general sub category of direct labor as well as the materials, and overhead stock. The cost of goods sold is considered to be a part of the labor and payroll taxes.
Beginning Inventory |+ |Purchases |- |Ending Inventory |= |Cost of Goods Sold | |$600 |+ |$1500 |- |$400 |= |$1700 | |$800 |+ |$2400 |- |$600 |= |$2600 | |There is also a first in and first out method that helps with keeping track of the inventory. So when things come in the stuff that is older should move forward and the new stuff should go in back. I believe that when it comes down to it the way we handle the sales of the products then the company should not have a problem with keeping track of the funds coming in and going out. Below I have added the example of how it should work. I have done two different...

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