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Beginning inventory_______?
Purchases (gross) 168,520
Purchase returns & allowances 1,155
Purchase discounts 690
Transportation-in 1,000
Cost of goods available for sale 168,875
Ending inventory 850
Cost of goods sold 168,025
Can someone help me find the BI on this problem!
List the steps or items to get to the COGS then work backward.
Formula for that section of the SOE is, COGS = Beginning Inventory + Purchases - Ending Inventory
So, to find the BI, you would re-arrange the formula to look like, BI = COGS - Purchases + Ending Inventory
Therefore,
BI = 168 025 - 168 520 + 850
BI = 355
You have COG available for sale, Just deduct the net purchases, i.e. gross - returns - discounts + transportation inQuote:
Originally Posted by london_mirza
Cost of goods available for sale 168,875Quote:
Originally Posted by iSKIM
Less: Net Purchases:
Gross 168,520
Returns (1,155)
Discounts (690)
Transportation 1,000
Net Purchases ------------------- 167,675
Beginning Inventory -------------- 1,200
I would think that my method is a lot more simplistic and easier...Quote:
Originally Posted by rehmanvohra
It is the method that I perform for top case companies (I am an Ivey Business student with an HBA)
That is the wrong answer first of all, second of all to figure out the beginning inventory, you do not need all that information. You can simply find it out by using the formula I have instructed, commonly used among the highest of accountants and financiers.Quote:
Originally Posted by rehmanvohra
Interesting answer. Can you please educate all of us, based on your expertise, how you would deal with the purchase returns, purchase discounts and transportation in (Carriage inwards) costs in the cost of goods sold statement?Quote:
Originally Posted by london_mirza
If you could quote some authority from where you derived your knowledge, it would be more enlightening.
Let us ignore the fact that the thread, like the other one you answered, is old. The OP is likely not even around anymore. It looks like you came looking for old threads on inventory.
It is also obvious that you don't get that this stuff is homework. Meaning we have to follow the way homework is done.
Your method included COGS which is not even necessary to solve it. Available for sale was given, subtract net purchases, and you're there.Quote:
I would think that my method is a lot more simplistic and easier...
Sorry, I'm not impressed. Firstly, because this is homework and I know how this is going to be taught and what they are going to consider to be the correct answer. Second, because your method isn't even followed the rules.Quote:
It is the method that I perform for top case companies (I am an Ivey Business student with an HBA)
If there are discount and returns, why do you not want to take these out of purchases? What were you planning on doing with them? It's part of the net purchases. So is the transportation. All cost to buy and receive the goods will count as the cost, less anything that comes off. That means purchases - discount - returns + transportion.
The answer IS $1200. 168,875 - 167,675 net purchases = 1200 beginning inventory.
COGS doesn't even figure into that.
And considering that I argue with rehmanvohra all the time, if I'm siding with him... well, let's just say that definitely has some merit.
That was almost fun...
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