I've just finished the balance sheet and realised that it doesn't balance!!
tell me if I'm wrong but:
COGS= opening balance + purchases - purchase returns + freight in - closing balance right?

and so from revenue - COGS - expenses = net profit
From this net profit figure ( from the income statement), I can transfer it to the Owners Equity in the balance sheet which becomes Net profit + capital - drawings + liabilities = Assets.

but the figures don't add up, I realised there's an offset equivalent to the Closing balance figure provided... if I were not to include the closing balance in the COGS section, then everuything balances out in the balance sheet... so... yeah.. unless I'm missing a closing balance entry in the balance sheet, but they don't appear in the balance sheet right>?:confused:

Closing Inventory appears as follows:-

1) As a Credit in the Trading Account.

2) As a Debit in the Current Asset Section of the Balance Sheet.

Oohhhh thanks!

COGS will be: Cost of materials sold less sales returns and allowances.