The 2011 and 2012 Balance Sheets for Jacob, Inc. contained the following entries: 3 / 3 points Accounts receivable Inventories Net fixed assets Accounts payable 12/31/2011 12/31/2012 $720 $452 $584 $816 $637 $659 $413 $611 Jacob had materials purchases in 2011 of $1,753 and materials purchases in 2012 of $1,957 . What did Jacob record as Cost of Goods Sold (COGS) on its 2012 income statement

Cost of Goods Sold (COGS) on its 2012 income statement  $1723

Explanation:

Jacob, Inc.

                                                 12/31/2011          12/31/2012

Accounts receivable                   $720                 $452

Inventories                                   $584                $816

Net fixed assets                           $637                   $659

Accounts payable                       $413                     $611

Jacob had materials purchases in 2011 of $1,753 and materials purchases in 2012 of $1,957.

This COGS is calculated by the following formula :

Cost of Goods Sold (COGS) = Beginning Inventory + Material Purchases - Ending Inventory

COGS= $ 584 + $ 1957 - $ 816= $ 1723

Calculations

Ending Inventories  $ 816

Less Beginning Inv $ 584

Difference $ 234      

Materials Purchases (2012)  $1,957

Difference $ 234

Cost of Goods Sold (COGS) on its 2012 income statement  $1723

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