how to work out the cost of sales?

meibaker
meibaker Registered Posts: 481 Dedicated contributor 🦉
trial balance extract
opening inventories 150,000
purchases 470,000
closing inventories 250,000
admin exp 185,000
distribution 240,000
addition info:
the depreciation charges for theyear ended are to be apportioned as following
cost of sales 60%
distribution 20%
administrative 20%
how to work out cost of sales?? thanks

Comments

  • beaneygirl
    beaneygirl Registered Posts: 79 Regular contributor ⭐
    Opening inventories + purchases - closing inventories= cost of sales
  • meibaker
    meibaker Registered Posts: 481 Dedicated contributor 🦉
    beaneygirl wrote: »
    Opening inventories + purchases - closing inventories= cost of sales

    but the answers add the depreciation as well? i am not sure why and how!
    suggested answer as following:
    opening inventories .....150
    dep ..........................18
    purchases .................470
    less closing inventories (250)
    =cost of sales ............388
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    Depreciation is sometimes charged to administration, although it makes more sense to charge it to cost of sales as its likely to be depreciation on machines.
  • meibaker
    meibaker Registered Posts: 481 Dedicated contributor 🦉
    PGM wrote: »
    Depreciation is sometimes charged to administration, although it makes more sense to charge it to cost of sales as its likely to be depreciation on machines.

    thanks PGM, i never know dep is charged to admin. i thought its only happen to machinery etc. but do you know how the depreciation is calculated in this question??
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
    It must tell you the depreciation amount in the question?

    Then you can split it by the % given.
  • meibaker
    meibaker Registered Posts: 481 Dedicated contributor 🦉
    PGM wrote: »
    It must tell you the depreciation amount in the question?

    Then you can split it by the % given.

    no, it didn't! only give the depreciation for land and building!
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