Step 6
Step 6
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:
dr | cr | |
---|---|---|
Flower Pin cost of sales | 100 | |
Flower Pin inventory | 100 |