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what is mercer's cost of goods sold under the accrual basis of accounting?
The Mercer Company uses the cash basis of accounting. Mercer Company made $500,000 in payments to its suppliers during the year. Mercer's beginning inventory was $20,000 and its ending inventory was $35.000. In addition Mercer had a beginning accounts payable of $50.000 and an ending accounts payable of $70.000. What is Mercer's cost of goods sold under the accrual basis of accounting?
a. $465,000
b. $495,000
c. $505,000
d. $535.000
how do you calculate this? my guess is that the answer is a or d but if someone could show the steps that would be greatly appreciated.
1 Answer
- SandyLv 79 years agoFavorite Answer
accounts payable
beginning bal. $50.000
+ purchases ?
- payments to suppliers $500,000
= Ending bal. $70.000
You can work out purchases to be $520,000
cost of goods sold
beginning inventory $20,000
+ purchases $520,000
- ending inventory $35.000
= COGS $505,000
Answer: c. $505,000
