Question

confused on how to get the cost of sales

Answer 1

In case of a manufacturer cost of sales = cost of finished goods in the beginning inventory + cost of goods manufactured during the year - cost of finished goods in the ending inventory

In case of a retailer cost of sales = cost of merchandise in its beginning inventory + net cost of merchandise purchased during the year - cost of merchandise in its ending inventory

It should be kept in mind that cost of sales do not include the following - selling, general and administrative (SG&A) expenses, or interest expense.