Cost of goods sold

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nicolasimpson1988
nicolasimpson1988 Registered Posts: 6
in Final Accounts Preparation
Hi,

I have the following question in a practise assessment,

At the end of the financial year, you have the following information:
Total sales £45000
Total purchases £40000
A mark up of 25% on cost was used though out the year.

Calculate the cost of goods sold and the value of inventory at the end of the financial year.

Can someone help with this please as i seem to be having a mental block.

Thanks

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  • AlisonSwanson
    AlisonSwanson Registered, Tutor Posts: 209
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    COGS is £45000 divide by 125 multiply by 100 = £36000

    Opening Inventory add £40000 less closing inventory = £36000

    To calculate the closing inventory figure you will need the opening inventory figure. Is it not given in the question??
  • nicolasimpson1988
    nicolasimpson1988 Registered Posts: 6
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    Thanks for your help, no there's nothing else in the question.
  • AlisonSwanson
    AlisonSwanson Registered, Tutor Posts: 209
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    Is it a new business with no opening inventory?
    What is the model answer?
  • Multiplicator
    Multiplicator Registered Posts: 116
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    thx for that alison - learnt something

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