Reconcile inventory and cost of sales

Opening inventory plus net purchases gives goods available at cost. Subtract ending inventory to calculate cost of goods sold for this simplified merchandising example. Inventory is expensed when sold, although cash can leave when it is purchased. Reconcile quantities to the physical count and investigate unusual costs or shrinkage. A fictional Kolkata wholesaler starts with ₹3 lakh stock, buys ₹9 lakh and ends with ₹4 lakh. Cost of sales is ₹8 lakh.