Can you explain how do we get COGS and Inventory? Exe Ltd sold supplies to Whi Ltd with a total sales value of $450,000. These sales were completed on terms of cost plus 20%. Whi Ltd had $65,000 of these supplies in inventory on hand as of 30 June 20X2. Date Account Debit $ Credit $ 30/6/X2 Sales 450,000 COGS 439,167 Inventory 10,833 (Elimination of intra-group sales revenue and COGS and elimination of URP in closing inventory)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Can you explain how do we get COGS and Inventory?
Exe Ltd sold supplies to Whi Ltd with a total sales value of $450,000. These sales were completed on terms of cost plus 20%. Whi Ltd had $65,000 of these supplies in inventory on hand as of 30 June 20X2.
| Date | Account | Debit $ | Credit $ | |
| 30/6/X2 | Sales | 450,000 | ||
| COGS | 439,167 | |||
| Inventory | 10,833 | |||
| (Elimination of intra-group sales revenue and COGS and elimination of URP in closing inventory) | ||||
| DTA | 3,250 | |||
| Income tax expense | 3,250 | |||
| (Recognition of the related income tax from consolidation adjustment to the carrying amount of inventory) |
Step by step
Solved in 3 steps
