Hi! Thanks for explaining this, i'm totally understand now. But i have a questions. How about if there's a purchase discount and return in the transactions? Do they affect the cost of goods sold and cost of the ending inventory? Thanks in advance 😊
Although I'm trying to figure out how you figure out you'd need a 1375 in 2:30, this was very concise and appreciate you sticking to the topic at hand.
You do an inventory count and whatever you have in your inventory at that time is your ‘ending inventory’. Sometimes it is lower than you expect because things get broken or stolen...
Look at the calculation of COGS, not the sales. Ignore sales for your costing calculations under the periodic method. Beginning inventory + purchases = cost of goods available for sale - ending inventory = cost of goods sold
Under the periodic method we are concerned with how many are left in ending inventory and we work backwards to determine COGS. In a perfect world the amount we sold would equal what was missing from the business.... but usually not the case! Determine what is in ending inventory.... EVERYTHING else is considered cost of goods sold.
