Question 3.3: Better-Price Stores, which we considered in Example 3.2 bega...

Accounting for Business Students

Better-Price Stores, which we considered in Example 3.2 began the reporting period with unsold inventories of $40,000 and during that year bought inventories at a cost of $289,000. At the end of the year, unsold inventories of $75,000 were still held by the business.

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The opening inventories at the beginning of the year plus the goods bought during the year will represent the total goods available for resale. Thus:

$
Opening inventories	40,000
Purchases (goods bought)	289,000
Goods available for resale	329,000

The closing inventories will represent that portion of the total goods available for resale that remains unsold at the end of the period. Thus, the cost of goods actually sold during the period must be the total goods available for resale less the inventories remaining at the end of the period. That is:

$
Goods available for resale	329,000
Closing inventories	(75,000)
Cost of sales (or cost of goods sold)	254,000

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