is if we have hertz is on January 1st in purchases on January thirty-year when the soul some goods we're going you d expect seeing the january 1st urge says first annual see exactly how it works in an example shortly so will be will be determining what caused a good soul is either expands good income statement and also be fair you know what I D inventory is which will go on the balance sheet as an asset which is of course inventory and adjust to things they want to go over which you should remember while we go through this presentation
the first one is that the play persist some is going to yield the same amounts for the periodic and be perpetual system so when we're calculator cost good sold in ending inventory the fight to map it is going to yield the exact same numbers for the periodic or the perpetual sis some it won't matter so it will always calculate the same members this remember that and the second one is that of course but by April method always remember to you cyrix spence the historical store call my inventory
first and you'll see what I mean by that as we go through I this example so we'll cover that now let me just close that's I will close these diagrams as well it'll bring up a table which is gonna go over some purchases and some sale them is gonna change my color your admitted to us Scion color and bring up a new layer cigarette on so basically what we're looking at is really not being immature with certain amount of units purchases sales purchases sales purchases nice with but corresponding amount of the units
we ever unit costs for our purchases and of course the sales price is going to be higher than our unit cost because the course for making a profit on the purchases are also would make sense to be in business so let's look at how we're gonna determine cost of goods sold so for this we're going to be looking I'm inventory example you seen I am inventory which is going to be were basically celine milk products because I think by PBO %ah obviously a purse work works but senior are most store going to trade for it makes sense that we're trying to read up be order milk inventory first before it expires so I think this would be a good example
news so let's go ahead and figure out what's how much our cost of goods sold is going to be so how we normally would do this as I would rate down kirchners and I will include all the all good beginning inventory as per perch says and the courage that so will have 300 units one units at ten dollars which is going to be three thousand dollars for that person mounted and current out to mature a beginning inventory is worth then we have a purchase which is 200 units at fifteen dollars
which is going to be three thousand dollars as well we have occurred just over 100 units when general event
for seventeen dollars each which is seventeen hundred dollars up inventory and by we have generated is 300 units acts twenty dollars which is going to represent six thousand dollars so basically how r reports you zero dark awesome goods sold well we're gonna have to look at the sales because our cost of goods sold is and expands when we make a sale so let's what's record the sales and figure out the cost of goods sold so if me the first
the first sale was made on January 8 so we so 300 units and know what I'm gonna wanna do is a min want to figure out what is the cost a good soul pretty 300 units well use enough weight to Matt said we want to expand its the first kirchners that Sri obtain so january 1st is our first inventory are our most sister going to burst so we're gonna expand so that first so 300 units and we have three hundred units are we originally had to begin with so rent expense all those and that sale is gonna have cost a good sober ,000 dollars so we just basically expands
I V the most historical i download milk which is going to be our last 13 basically got rid of that see how it basically based this costs up close some shane is getting rid of or it's expecting be historical items first and then the next sales going to be two hundred and fifty units which is going to equal how much well the second level here only has 200 yet so we can expand its all about at three thousand dollars but that's not the only units me 250 units so there's missile if he remained so
ice actually say that oh only let me slip this %uh ball well actually say 200 200 equal to you three thousand dollars a while the remaining 50 units what is that going to be equal to well we would move down to the next level me with a 50 units at 17 dollars is going to be how much what's let's get our calculator there good sir and fifty times seventeen is going to be eight hundred and fifty dollars which is going to cost of goods sold
for those remaining 50 units
and of course we have gone to read out to be the second amount that milk and we kinda gotten rid early expands Applebees units because we have remains in speed on the expense fifty FBI units a bat purchase order so you always wonder rate down the remaining I mounted unit but you still have to expect in case there are more sales entries and looks for greater cost a good soul because ,000 Oct 3 2008 that you have to be six thousand which is our cost %uh
goods sold which is at our expense for inventory and now we just need to figure and inventory which is just going to be the residual amounts I which is which is going to be subtracted from how much inventory we originally had so we had 6700 ,000 3,000 that's going to be I ,000 703 originally BJ and wet so 13,700 subtracts 50 what will that be that will be 3700 -68 50 is going to be ironically that is which is our an inventory and their egos its it's it's that simple.
we just expense are most historical units first and up with their cost of goods sold and then me find a residual amount which I is subtracted from how much we began with an you can also calculate and inventory by game by a looking at be mounted units yet and you know it so 300 units at twenty dollars the 6,000 and 50 units times 17 is eat turkey Saudi 6,000 800 and fifty as well so he can also calculated that way in case your cost of goods sold number is incorrect and that's basically the playful method
I am I think that's all I basically wanted to cover and will be basically covering the weighted average or the average are costing method for inventory in an exit row so make sure to subscribe like always spurred the channel and of course I'm you can sign up on internet .ca when me finished the website developments which is going to have a lot of great resources for accounting and business students and students in general so of you guys in an exit row.. Thanks for visit...
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