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The cost of goods sold formula is Starting inventory plus purchases minus ending inventory which is equal to the cost of goods sold. In this case, the cost of goods sold is equal to $32,500.
What is Cold of good sold?
The cost of goods sold (COGS) is actually the price of manufacturing the products an agency then sells. In the case of physical goods, it usually consists of the cost of current stock plus any associated substances and direct labor prices incurred over the year.
The cost of goods sold formula is:
Starting inventory + purchases − ending inventory = cost of goods sold.
As per the given information,
beginning inventory - $20,000
purchases - $15,000
ending inventory - $2,500
[tex]\rm\,Cost \,of\, goods \,sold = \$20,000 + \$15,000 - \$2,500\\\\\rm\,Cost \,of\, goods \,sold = \$32,500[/tex]
hence, the cost of goods sold is equal to $32,500.
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