ACCA FA · Chapter 4 · Question 9 of 10
The following information relates to a business for a year: Opening inventory $14,200 Purchases $86,500 Carriage inwards $1,900 Carriage outwards $2,300 Purchase returns $3,100 Closing inventory $16,800 What is the cost of sales?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $82,700
Explanation
Cost of sales = $14,200 + $86,500 + $1,900 - $3,100 - $16,800 = $82,700. Carriage inwards is part of the cost of purchases, whereas carriage outwards is a distribution cost and is excluded. Including carriage outwards gives $85,000 and adding the returns instead of deducting them gives $88,900.
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