You may recall from Principles I that “Cost of goods sold” for a retailer is figured as shown below: Beginning inventory + Purchases = Cost of goods available for sale – Ending inventory = Cost of goods sold (A) How does the “Cost of Goods Sold” section of the income statement differ between merchandising and manufacturing companies and how is it calculated for manufacturing companies? (B) Inventory on the balance sheet is also different for a manufacturing company than for a retailer. What are the three types of inventory on a manufacturer’s balance sheet? After naming all three, select one and discuss it. Please type out so I can read correctly*
You may recall from Principles I that “Cost of goods sold” for a retailer is figured as shown below:
Beginning inventory
+ Purchases
= Cost of goods available for sale
– Ending inventory
= Cost of goods sold
(A) How does the “Cost of Goods Sold” section of the income statement differ between merchandising and manufacturing companies and how is it calculated for manufacturing companies?
(B) Inventory on the balance sheet is also different for a manufacturing company than for a retailer. What are the three types of inventory on a manufacturer’s balance sheet? After naming all three, select one and discuss it.
Please type out so I can read correctly*
Gross profit means the difference between the sale revenue and cost of production.
Cost of goods sold means the difference between the sales and gross profits.
Cost of goods sold = Opening stock + purchases + direct expenses – closing stock
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