Enter the beginning inventory, purchases, and cost of sales into the calculator to determine the ending inventory. This calculator helps maintain a perpetual inventory system by updating inventory records continuously.
Perpetual Inventory Formula
The following formula is used to calculate the ending inventory in a perpetual inventory system:
EI = BI + P - CS
Variables:
- EI is the ending inventory ($)
- BI is the beginning inventory ($)
- P is the total purchases ($)
- CS is the cost of sales ($)
To calculate the ending inventory, add the total purchases to the beginning inventory and then subtract the cost of sales.
What is Perpetual Inventory?
Perpetual inventory is a method of accounting for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software. It provides a highly detailed view of changes in inventory with immediate reporting of the amount of inventory in stock, accurately reflecting the level of goods on hand.
How to Calculate Ending Inventory?
The following steps outline how to calculate the ending inventory:
- First, determine the beginning inventory (BI) in dollars.
- Next, determine the total purchases (P) made during the period in dollars.
- Next, determine the cost of sales (CS) for the period in dollars.
- Use the formula from above to calculate the ending inventory (EI).
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
beginning inventory (BI) = $5000
purchases (P) = $2000
cost of sales (CS) = $1500
