Final answer:
The final cost of inventory (net amount of purchases) can be found by subtracting the cost of goods sold from the cost of goods available for sale. This involves calculating the net purchases and subtracting the cost of goods sold from the beginning inventory and net purchases.
Step-by-step explanation:
The final cost of inventory can be found by calculating the net amount of purchases. To do this, you need to subtract the cost of goods sold from the total cost of goods available for sale. Here is a step-by-step explanation:
- Calculate the cost of goods available for sale, which is the sum of the beginning inventory and the net purchases (purchases minus any purchase returns or allowances and purchase discounts).
- Determine the cost of goods sold, which is the cost of the goods that were sold during the period. This can be calculated using the following formula: Beginning inventory + Net purchases - Ending inventory.
- To find the final cost of inventory (net amount of purchases), subtract the cost of goods sold from the cost of goods available for sale. This will give you the net amount of purchases.