1. The Trading Account
24th September 2012

2. Quote of the day…….
“Is Feidir Linn!”
President Obama
Dublin 2011

3. What will we learn today?
How to calculate Cost of Sales
The difference between Cost of goods available for sale & Cost of Sales
The layout of the Trading Account
How to calculate Gross Profit/Loss

4. Cost of Sales – What is included?
The cost of purchasing materials needed
Cost of making the goods (including labour)
Cost of transporting materials to the factory (Carriage in)
Import or custom duty if materials came from abroad

5. Cost of Goods available for Sale
The Cost of goods available for sale is the cost of making all the goods. Every item manufactured is included in this cost
The Cost of Sales/ Cost of Goods Sold is the cost of the goods they actually sold. It does not include goods that were not sold, i.e. Closing Stock
The amount of goods made may not be the same as the amount of goods sold

6. Example
From the following information, prepare a trading account for S. Maguire for the year ended 31/12/11
Purchases €45,000; Sales €80,000; Carriage Inwards €3,500; Import duty €2,750, Opening Stock €15,000; Closing Stock €25,000.

7. Returns.
Sometimes goods are returned. Why do you think this is?

8. Returns Purchases Returns/Returns Outwards
Goods that were purchased by the company but are now being returned by the company.
Sales Returns/Returns Inwards
Goods that were sold by the company but have now been returned to them

9. Recap Questions Why is a trading account prepared?
What is Cost of Sales/Cost of goods sold?
What is cost of goods available for sale?
Why is closing stock not included in cost of sales?
Why are goods returned?