Firstly you will need to know the total cost of goods sold during the period. In this scenario, assume the cost of goods sold to be $10,000.
Now you will need to find two things. The ending inventory balance on the balance sheet of the current year, and the new purchases your company has made. For instance, the ending inventory value is $20,000, and the company makes additional purchases in the region of $5000.
Add the ending inventory to the cost of goods sold. In this example, you will end up with $30,000 (20,000+10,000).
The general formula for beginning inventory is:
Beginning inventory= Cost of Goods Sold + Ending Inventory – Additional purchases made during the year. Therefore, considering the current example, the value will be computed by subtracting purchases from the Cost of Goods Sold and Ending inventory, i.e. $30,000 - $ 5000= $25,000