TsIzzWe (Ts) is a company that purchases T shirts from the manufacturer, Frootyl

Question

TsIzzWe (Ts) is a company that purchases T shirts from the manufacturer, Frootyluums (Frooty) and sells them to college students through the college bookstore, Rskoolstore (RSkool). Ts has hired you to be the accountant for the company.

Ts has decided to use the inventory flow method with its perpetual inventory system. Using the data provided for transactions that occurred during August, determine the Gross Profit at the end of the period.

8/6      Ts purchased 200 long sleeve blue shirts on account from Frooty for $3 each. Terms FOB-SP   2/10, n30 Shipping costs = $40

8/8       Ts purchased 500 short sleeve blue shirts on account from Frooty for $2.50 each. Terms FOB-D 2/15, n30 Shipping costs = $50

8/10    Ts notified Frooty that 50 of the long sleeve shirts were purple. After negotiation, Frooty agreed to reduce the price of those shirts to $2 each. Ts agreed to keep the shirts.

8/11    Ts purchased 400 long sleeve blue shirts on account from Frooty for $3.50 each. Terms FOB-D n/eom Shipping costs = $40

8/12    Ts sold 290 long sleeve blue shirts to RSkool on account for $8 each. Terms FOB-SP    1/10, n30 Shipping costs = $30

8/14    Ts paid for the purchase on the 6th.

8/16 Ts sold 20 long sleeve purple shirts to RSkool on account for $5 each. Terms FOB-D 2/10, n/eom Shipping costs = $5

8/18    Ts paid for the short sleeve shirts

8/20    Ts sold 380 short sleeve shirts to RSkool on account for $7 each. Terms FOB-SP n/eom   Shipping costs = $38

8/21    Ts received payment from RSkool for the long sleeve blue shirts

8/22    RSkool returned 100 of the short sleeve shirts because they were too small.

8/24    Ts sold 200 long sleeve blue shirts to RSkool on account for $8 each. Terms FOB-D   3/5, n/30 Shipping costs = $30

8/29    Ts received payment from RSkool for the purchase on the 24th

8/30    Ts received payment from RSkool for the purple shirts.

8/31    Ts received payment from RSkool for the purchase on the 20th

8/31    Ts paid for the purchase on the 11th.

Explanation / Answer

Particulars Amt Sales for short seeleves 2320 Sales of long sleeves 100 Sales for short seeleves 2660 Sales return -800 Discount given -23.2 Discount given -48 Discount given -23.2 Discount given -1 Net Revenue 4184.6 Less: Cost of Good sold Purchasesof short sleves=(200+380-100)*2.5 1200 Purchase of long sleeves 300 (150*3+140*3.5(blue shirt)+20*2(purple shirt) 980 Discount received on purchase -11 Discount received on purchase -22 Net purchases 2447 Shipping Cost 40 Shipping Cost $40 Shipping Cost 30 COGS 2557 Gross Profit 1627.6 Date Particulars Amt 6-Aug Purchases of long sleeves $450 (150*3) Shipping Cost 40 8-Aug Purchasesof short sleves 1250 10-Aug Purchases of long sleeves 100 50*2 11-Aug Purchases of long sleeves 1400 (400*3.5) 12-Aug Sales for short seeleves 2320 290*8 14-Aug Cash 539 Discount received on purchase 11 (450+100)*.02 16-Aug Sales of long sleeves 100 (20*5) Shipping Cost $40 18-Aug Cash 1225 Discount received on purchase 25 (1250*.02) 20-Aug Sales for short seeleves 2660 (380*7) 21-Aug cash 2296.8 Discount given (290*8*.01) 23.2 22/8 Sales return 800 (100*8) 24-Aug Sales for short seeleves 1600 (200*8) Shipping Cost 30 29-Aug cash 1552 Discount given 48 1600*.03 30-Aug cash 99 Discount given 1 31-Aug Cash 2660

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