Using the formula Opening Inventory + Purchases - Closing Inventory, calculate the cost of sales given Opening 4,080; Purchases 50,000; Closing 2,500.

Using the formula Opening Inventory + Purchases - Closing Inventory, calculate the cost of sales given Opening 4,080; Purchases 50,000; Closing 2,500.

• A. 51,580
• B. 46,580
• C. 53,000
• D. 50,000

Answer: (A)

Cost of sales shows what was actually sold during the period by starting with what you had at the beginning, adding what you purchased, and subtracting what you still have at the end. With opening stock four thousand eighty, purchases fifty thousand, and closing stock two thousand five hundred, you add opening and purchases to get fifty-four thousand eighty. Subtract the closing stock and you get fifty-one thousand five hundred eighty in cost of sales.

Cost of sales shows what was actually sold during the period by starting with what you had at the beginning, adding what you purchased, and subtracting what you still have at the end. With opening stock four thousand eighty, purchases fifty thousand, and closing stock two thousand five hundred, you add opening and purchases to get fifty-four thousand eighty. Subtract the closing stock and you get fifty-one thousand five hundred eighty in cost of sales.