Here we will adjust SpringTime’s ending inventory and record the cost of sales for Flower Pins.
We are told that the ending value of flower pins is $200. We see that the opening balance was $300. As we are not aware of any additions of inventory, we can presume that $100 of inventory was sold in the year. We see that flower pin revenue has a healthy mark-up and therefore no writedown is required for inventory.
We therefore make the following adjustment to inventory and record the cost of sales:
|Flower Pin cost of sales||100|
|Flower Pin inventory||100|