Question:Comfort Solutions sells a wide range of mattresses to consumers. For the mostrecent year, Comfort Solutions provided the following data:Beginning inventory $2,450,000Purchases$23,125,000Ending inventoryTransportation in$2,225,000$511,500Comfort Solutions informs you that it has traditionally treated transportation in asa period expense. However, the firm has a new auditor this year. The auditorbelieves that the cost of transportation in should be treated as a product cost and,as such, should flow through the firm's inventory account.Required:a. What is Comfort's cost of goods sold under its current (traditional) system?b. Assume the auditor asks Comfort to allocate the cost of transportation inbetween cost of goods sold (as computed in part (a)) and ending inventory. Usingthis approach, what is Comfort's cost of goods sold?c. Which approach, (a) or (b), do you believe is most appropriate for ComfortSolutions?

SOLUTION (a) :Traditional System COGS : Under the traditional system where transportation in is…

Answered: Question: Comfort Solutions sells a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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