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Where Taxpayers and Advisers Meet

cost of sales

ian777
Posts:2
Joined:Mon Feb 01, 2021 12:16 pm
cost of sales

Postby ian777 » Tue Feb 02, 2021 7:50 pm

Hi everyone, hope someone can help!

If my opening stock is £13,000
purchases is £30,000
sales are £29,000
closing stock is £60,000
ebay fees are £5,000
what is my cost of sales?

Lambs
Posts:1611
Joined:Wed Aug 06, 2008 3:15 pm

Re: cost of sales

Postby Lambs » Tue Feb 02, 2021 8:23 pm

On basic principles:

Sales = £29,000

Less: Cost of Sales
+£13,000
+£30,000
-£60,000
+£5,000
Total Cost of Sales = -£12,000

Gross Profit = £41,000

But you have a negative cost of sales, which is very difficult to achieve. It looks to me like your figure for closing stock is wrong. How can you have started the year with £13,000' worth of stock, spent another £29,000, but have closing stock of £60,000? Basically, stock should be valued at the lower of cost and "net realisable value" so it would be physically impossible to have a higher value for closing stock than what you started with at the beginning of the year, and bought during the year - unless you had substantial stock returns, or something similar.

Regards,

Lambs

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: cost of sales

Postby bd6759 » Tue Feb 02, 2021 11:37 pm

Looks like he has used selling price to value the stock.

ian777
Posts:2
Joined:Mon Feb 01, 2021 12:16 pm

Re: cost of sales

Postby ian777 » Mon Feb 08, 2021 10:09 pm

Thank you so much for the replies , Very helpful !

Lambs
Posts:1611
Joined:Wed Aug 06, 2008 3:15 pm

Re: cost of sales

Postby Lambs » Tue Feb 09, 2021 1:26 am

Welcome.

Regards,

Lambs


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