Self-Study Problem 3.2

Kelly owns a small retail store. During the year, Kelly purchases $178,750 worth of inventory. Her beginning inventory is $62,500 and her ending inventory is $68,400.

Use Part III of Schedule C below to calculate Kelly's cost of goods sold for the year.

Enter all amounts as positive numbers.

Part III

Cost of Goods Sold (see instructions)

33	Method(s) used to
	value closing inventory: a Cost b Lower of cost or market c Other (attach explanation)
34	Was there any change in determining quantities, costs, or valuations between opening and closing inventory?
	If "Yes," attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		Yes No
35	Inventory at beginning of year. If different from last year's closing inventory, attach explanation . . . . . . . .	35	62500
36	Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36	178750
37	Cost of labor. Do not include any amounts paid to yourself . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37
38	Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38
39	Other costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	39
40	Add lines 35 through 39 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40	241520
41	Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	41	68400
42	Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 . . . . . . . . . . . . . . .	42	172850