The physical inventory of merchandise at the close of business, December 31, 2009 showed $25, 822.50. The beginning balance was 20595.00. Can you help me to figure this out?

The physical inventory of merchandise at the close of business, December 31, 2009 showed $25, 822.50. The beginning balance was 20595.00. Can you help me to figure this out?

This can be due to so many possible reasons, I would verify all reports and look for qty on hand changes. One possible reason could be the system is configured to removed all items in WIP for current year during year end processing. Another possible reason is that you had one or more error transaction which had been clear out during year end processing.

Ending inventory is equal to beginning inventory plus purchases minus Cost of Goods Sold.

Apparently you forgot to add purchases to your inventory account.