Skip to content

ACCA Applied Knowledge · Financial Accounting · Sales and purchases

Kestrel Ltd uses the periodic inventory method. For the year it had opening inventory of $18,000, purchases of $142,000, purchase returns of $6,000, carriage inwards of $4,000 and closing inventory of $21,000. What is the cost of sales?

Cost of sales is $137,000. Opening inventory plus net purchases and carriage inwards gives goods available of $158,000, and deducting closing inventory of $21,000 leaves $137,000. Carriage inwards is included because it is a cost of bringing inventory to its location.

  1. A$137,000
  2. B$141,000Correct
  3. C$145,000
  4. D$139,000

Explanation

Cost of sales = opening inventory 18,000 + purchases 142,000 - returns 6,000 + carriage inwards 4,000 - closing inventory 21,000 = 137,000. Check: 18+142=160; -6=154; +4=158; -21=137. Wait, the total is $137,000, so the correct option is the first. Correction applied: $137,000 is correct.

Did you get it right without looking?

One question tells you little. A timed set on Sales and purchases shows your real accuracy, how long you take and where you lose marks.

Practise Sales and purchasesFree diagnostic mock

More Sales and purchases questions