Now that operations for outdoor clinics and TEAM events are running smoothly, Su
ID: 2417979 • Letter: N
Question
Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2013. All watches are sold for $309 each.
Sold 48 watches for $14,832 on account.
1. a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2013, assuming Suzie uses FIFO to account for inventory.
b. Prepare the gross profit section of a partial income statement for transactions related to MU watches.
2. Late in December, the next generation of multiuse (MU II) watches is released. In addition to all of the features of the MU watch, the MU II watches are equipped with a global positioning system (GPS) and have the ability to download and play songs and videos off the internet. The demand for the original MU watches is greatly reduced. As of December 31, the estimated market value of MU watches is only $108 per watch.
a. Record any necessary entry on December 31, 2013, related to this information.
b. For what amount would MU inventory be reported in the December 31, 2013, balance sheet?
c. Prepare an updated gross profit section of a partial income statement accounting for this additional information.
Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2013. All watches are sold for $309 each.
Explanation / Answer
1 (a)
sales revenue
July 31 Sold 41 watches for $12,669 cash. = 12669
Aug 22 Sold 23 watches for $7,107 on account. = 7107
Nov 20 Sold 111 watches for $34,299 cash. = 34299
Dec 8 Sold 48 watches for $14,832 on account = 14832
$68907
Cost of goods sold :
total purchase watches - sale of watches = ending inventory
284 - 223 =61watches
July 31 41 watches at $140 = $5740
22 Aug 13 at $140 and 10 at 156 = 3380
Nov 20 32 watches at $156 and 79 at $163 = 17869
Dec 8 10 at $163 and 38 at $170 = 8090
$35079
ending inventory
Dec 4 (99-38)watches at $170 $10370
b cost of goods sold = net sale - gross profit
$35079 = $68907 - gorss profit
gross profit = $33828
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.