The Purchases and Sales history for the past four months is as follows:
Grand Harps Modern Harps Total
Purchased 2 at $6,500 each 20 at $1,200 each $37,000
Sold 1 at $10,000 each 18 at $2,500 each $55,000
Opening Inventory
As at 1May 2011 1 at $6,500 each 2 at $1,200 each $8,900 *
*Note: The opening inventory as at 1 May 2011 is included in the Purchases account of $37,000.
The business starts in January 2011 and end in 31 May 2011 and using Periodic FIFO inventory system.
The trial balance at 1 May 2011, purchase account is $37,000 and no inventory account.
1) why is the opening stock in 1 May 2011 of $8,900 is different from the trial balance of $37,000? What I need to do?
2) Is the following 2 items correct?
Cost of sales= (1 x $6,500) + (2 x $ 1,200) = $8,900
Closing inventory= (1 x $6,500)+ (18 x $1,200) = $ 28,100
Thanks for your reply.
