Current Cost of Sales Adjustments (COSA)- Related Problem with Solution - Management Duniya

Current Cost of Sales Adjustments (COSA)- Related Problem with Solution

Problem:

Calculate the cost of sales adjustments from the following

Opening stock = 52000

Closing Stock = 72000

Purchases = 220000

Index No. Opening 100 Avg.=110 Closing =120

Solution:

Cost of Sales (Historical cost) = Opening Stock + Purchases – closing stock

                                                                 52000 + 220000 – 72000  = 200000

Cost of Sales = (C-O) – I_a  [ C/I_c – O/I_o]

[72000-52000]= 110 [72000/120 – 52000/100]

[20000] = 110 [600-520]

[20000] = 110 [80]

20000 = 8800 = 11200

COSA = 11200

Verification:

Opening Stock: [52000 x 110/100]=             57200

(+) Purchases:                                                         220000

                                                                                    —————-

                                                                                     277200

(-) Closing Stock: [72000 x 110/120]            66000

                                                                                  —————–

                Cost of Sales                                           211200

Adjustment: 211200 – 200000 = 11200

Tags: Account, accountant, accounting, Accounting Management, Adjustments, closing stock, Cost, cost of sales, Expenditure, expenses, finance, financial, historical cost, income, Loss, Management, Management Accounting, Opening stock, problem, Profit, Profit and Loss, Profit and Loss account, purchases, revenue, sales, solution, tax
By: Management Duniya