How to work out cost of goods sold
Opening inventory, plus purchases, less closing inventory. Build the cost of goods sold step by step and get to gross profit.
Task 1The cost of purchases2 questions
Cost of goods sold is the cost of the goods that were sold in the year. It starts with what was bought.
| Account | Balance |
|---|---|
| Purchases | 14,500.00 |
| Purchases returns | 400.00 |
| Carriage inwards | 240.00 |
Purchases returns are goods sent back to suppliers, so they are taken off. Carriage inwards is the cost of getting goods in, so it is added.
Carriage outwards is the cost of delivering to customers. It is an ordinary expense, shown after gross profit, and is not part of the cost of goods sold.
Task 2Opening, plus purchases, less closing4 questions
Task 3Gross profit3 questions