Monte Vista uses the perpetual inventory system. At the beginning of the quarter, Monte Vista has $60,000 in inventory. During the quarter the company purchases $15,800 of new inventory from a vendor, returned $1,400 of inventory to the vendor, and took advantage of discounts from the vendor of $400. At the end of the quarter the balance in inventory is $53,000. What is the cost of goods sold?

the cost of goods sold is $21,000

Explanation:

Cost of Goods Sold is equal to Opening Stock add Purchases less Closing Stock.

Calculation of Monte Vista cost of goods sold is as follows:

Opening inventory $60,000

Add Purchases

Purchases $15,800

Less Returns Outwards ($1,400)

Less Suppliers' Discounts ($400)

Total Purchases $14,000

Available for Sale $74,000

Less Closing Stock

Closing Inventory ($53,000)

Cost of goods sold $21,000