Inventory and Cost of Inventory

Inventory  and Cost of Goods Sold for Small Taxpayers

Maintaining List of Inventory:

1.List of inventories is required to maintain for merchandising business. Service company is not required to maintain list of inventory.

2.For mixed inventory and service supply small taxpayers, no list of inventories is required to maintain if the turnover from selling goods is less than or equal 10% of the total turnover from selling goods and selling services.

Cost of goods sold or cost of goods for supply service:

Cost of goods sold/ cost of goods for supplying service = Total beginning inventory + Total purchase – Total ending inventory

-Each beginning inventory = units of each inventory type x last purchase price of each inventory type for previous year.

-Purchase during year = each inventory type purchased during year x actual price of each inventory type .

-Each ending inventory=units of each inventory type x last purchase price of each inventory type for current year.