A cost of goods sold statement shows the cost of goods sold over a specific accounting period, typically offering more insights than are found on a normal income statement.
Cost of Goods Sold Statement

Example

John Manufacturing Company, a manufacturer of soda bottles, had the following inventory balances at the beginning and end of 2018:

Inventory Balances

In 2018, the company purchased $1,000,000 of raw materials, and direct labor incurred a cost of $1,600,000. Manufacturing overheads were as follows:

Manufacturing Overhead Costs
Sales revenue was $4,105,000 for the year. Selling and administrative expenses for the year amounted to $110,000.

Required

  • Prepare a cost of goods manufactured statement
  • Prepare a cost of goods sold statement

Solution

The cost of goods manufactured statement is shown as follows:

John Manufacturing Company Cost of Goods Manufactured Statement

Preparation of cost of goods sold statement:

John Manufacturing Company Cost of Goods Sold Statement

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