Final answer:
The calculation of goods available for sale under the perpetual inventory method includes summing the beginning inventory and the cost of purchases during the period. It represents the total inventory that could potentially be sold.
Step-by-step explanation:
To calculate goods available for sale under the perpetual inventory method, start with the beginning inventory at cost, then add the cost of any purchases made during the period. Goods available for sale in this context is the sum of the beginning inventory plus the costs of purchases. It is an important figure because it represents the total merchandise that a company has at its disposal to sell during a specific accounting period.
To elucidate by way of example, if a company started with an inventory valued at $10,000 and made additional purchases worth $5,000, the goods available for sale would be $15,000. This figure does not yet take into account the cost of goods sold (COGS); it merely represents the potential inventory that could be sold. At the end of the accounting period, to calculate the ending inventory, you would subtract the COGS from the goods available.