Page 71 - Accountancy_F5

2. The value of ‘B’ = Cost of sales
Net sales – Cost of sales = Gross profit 5,074,400 – Cost of sales = 1,268,600
Cost of sales = TZS 3,805,800

3. The value of ‘A’ = Closing inventory
Cost of goods available for sale – Closing inventory = Cost of sales
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4,438,400 – Closing inventory = 3,805,800
Closing inventory = TZS 632,600

Alternative 2
Draw the statement of closing inventory, from accounting relationship between closing
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inventory, cost of goods available for sale, cost of sale and sales.
Note that: Sales – Cost of sales = Gross profit

Making cost of sales the subject:
Cost of sales = Sales – Gross profit
But, cost of sales = Opening inventory + Net purchases – Closing inventory
and, opening inventory + Net purchases = Cost of goods available for sale
So, cost of sales = Cost of goods available for sale – Closing (making closing inventory
the subject)

Making closing inventory the subject:

Closing inventory = Cost of goods available for sale – Cost of sales

Alternatively:
Closing inventory = Cost of goods available for sale – (Sales – Gross profit)
So, the statement will be drawn from the above idea as:

Student’s Book Form Five
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