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Example 1
In year 1 (the first year of trading), a business had purchases of $20,000 and sales of $30,000. There
was no inventory at the end of the period.
(a) Show the trading account of the business for year 1, in a form suitable for presentation
to the owners, and
(b) Write up the accounts for purchases and sales, and close them off at the end of theANSWER:
sales :$30,000 – purchases: ($20,000) = Gross profit:$10,000In this section of the topic the $10,000 is not only the gross profit but the cost of inventory sold right? am asking because this topic is about inventory valuation and not gross profit like you are naming it in your online lecture.s
Of course it is the gross profit!!!!!
The gross profit is the sales less the cost of sales. If there is no inventory then the cost of sales is equal to the purchases.
Have you not been watching the lectures in order, because this is explained in one of the very first chapters.
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