Cost of Goods Sold?
Closing stock (especially closing stock)
Ive looked on the net..it provides answers..but theyre too hard to understand. Im really have trouble with figuring out how to get the Cost of Goods Sold. Please answer so a 16 yr old can understand. Thanks so much.
- fivestring46Lv 41 decade agoFavorite Answer
To sell an item, you must manufacture it or buy it.
If you purchase it, it goes in your warehouse as merchandise inventory.
If using the perpetual system, when you sell it, it must come out of your merchandise inventory.
Let's set up a situation. You purchase 10 football jerseys which you plan to sell to your friends. You pay 10.00 for each jersey which is a total of 100.00. This is your merchandise inventory.
Lets say you decide to sell them for 20.00 each, giving you a 10.00 profit.
You make your first sale. Your journal entry would be:
debit cash 20.00
credit sales 20.00
This takes care of only part of what happened.
If you sold one Jersey, it is no longer in your merchandise inventory. You would have to remove the item you sold by:
debit cost of merchandise sold 10.00
credit merchandise inventory 10.00
A credit to merchandise inventory reduced your inventory to 90.00. And, a debit of 10.00 to cost of merchandise sold offsets the sales. Cost of merchandise is like an expense account.
You can also use this information to calculate your gross profit.
sales - cost of merchandise sold = gross profit
20.00 - 10.00 = 10.00Source(s): Professional Accounting Tutor
- 1 decade ago
opening stock is the amount of your goods left from previous year whcih will be traded in your subsiquent business year. and purchases is the amount of goods that you bought during the year. hence closing stock is also the amount of goods left at the end of your accounting period, my statement below will help you figure out your cost of goods sold .
pressuming at the begining of the year you have unsold goods costing $200. and during the year you bought more goods costing $400. at the end of your accounting period you were able not to sale all the goods available for sales, so the unsold was $100. This is how to get the cost of goods that you sold.
(1) opening stock $200
(2) then you add your purchases + $400
then u get total amount of goods availabe for sales =$600
(3) then you less the amount of goods left _ $100
then answer is your cost of goods sold, which is =$500
- 1 decade ago
cost of goods sold
= cost of goods available
- closing stock
- Anonymous4 years ago
it would look that "fee of goods bought" could be the total fee of what the keep paid from the distributor/producer for the products that have been later bought via the keep. sales is what the keep sells in the two greenback volume or volume. must be incorrect however.....