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

Now that you have learned how to prepare the Cost of Goods Sold Statement, would you like to check your knowledge of the COGS Statement by taking the MCQs we have prepared for you? Here is the link to the Cost of Goods Sold Statement MCQs.

Frequently Asked Questions

What is a cost of goods sold statement?

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.

What are goods?

The things which are manufactured for selling purpose or bought for reselling purpose are known as goods or merchandise.

What are the required factors in the cost of goods statement?

First, prepare a cost of goods manufactured statement. Then, prepare a cost of goods sold statement.

What is a cost of goods manufactured statement?

Cost of goods manufactured is the total cost incurred by a manufacturing company to manufacture products during a particular period.

What is a cost of goods sold?

The cost of goods sold, or cogs, refers to any direct cost associated with the production of a product. This includes materials, direct labor, machinery, and manufacturing overhead.

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True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.