Periodic inventory method1/17/2024 ![]() Ending with a balance higher than the beginning inventory balance can indicate that the business might need to: The ending balance of $7,500 will be the starting inventory balance in the next accounting period. The below table shows the final inventory balance for the camping gear at the end of the accounting period. Calculate the Final Inventory Balance Account The debit to the inventory account represents the increase in our inventory assets due to the adjustment, while the credit to the COGS account reflects the expense we incurred. The business counted 250 bags with a total cost of $12,500. Next is a physical count of the inventory at the end of the period to adjust the account and reflect the actual inventory on hand. » Find out how to calculate cost of goods sold (COGS) for your Shopify store Adjust the Inventory The debit to the COGS account represents the expense we incurred in selling the bags, while the credit to the inventory account reflects the decrease in our inventory assets due to the sales. The business sold 150 bags and the cost per bag is $50, so the COGS is $7,500. Second, record the sales of the camping bags and the COGS. ![]() ![]() To record this transaction, use the following journal entry: The business bought 200 bags for $50 each, for a total cost of $10,000. The first step is to record the purchases of the camping bags in our inventory account. The goal is to perform the necessary periodic journal entries to update inventory accounts and help ensure accurate financial statements. During the accounting period, it sells 150 bags for a total of $12,000. The retailer purchases 200 camping bags for $50 each and starts the accounting period with 100 bags in stock. ![]()
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