Can one have the sale of inventory as of 10/15/2020 (the ending inventory shows in the calculation of CoGS), although the company has 0 inventory as of 12/31/2020?

Forum|Forum|4 years ago
January 3, 2022
2 replies
9 views

Ending inventory for cost of goods sold calculation is in the cost of goods sold calculation (this was on 10/15/2020), yet I show 0 ending inventory on my 12/31/2020 balance sheet, because my client retained ownership of some other assets>

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George4Tacks

Level 15

That sounds perfect. What is the question?

Answers are easy. Questions are hard!

P

PosAuthor

Level 2

I keep getting an error message, saying "Ending inventory in the cost of goods sold section is different than the ending inventory on the balance sheet". How do I get around this?

George4Tacks

Level 15

Force the ending inventory to also be zero. You said you sold all your inventory, so both should be zero. That may cause another error. What do the financial statements say?

Answers are easy. Questions are hard!

joshuabarksatlcs

Level 9

My understanding:

The inventory as of 10/15 was distributed to the shareholder(s).

For the purpose of correctly computing the COG , you wanted to use the 10/15 amount as the "ending balance", but the "ending balance" for the year was actually zero.

If the above was the correct picture, let's say the distributed inventory (10/15/ balance) was $15000, I would reduce purchases (credit) by $15,000. For audit trail, I would debit an account titled "Non-sale Inventory", "distributed inventory" "Special order inventory"... on the balance sheet.

Then record journal entries:

Debit draw (showing the distribution)

Credit "distributed inventory" (or whatever). Keep ending inventory to zero.

The amount paid for the distributed inventory should NOT be part of the COG.

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