Two or more items are omitted in each of the following tabulations of income sta
ID: 2459145 • Letter: T
Question
Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing. E8-9 Chippewas Company sells one product. Presented below is information for January for Chippewas Company. Jan. 1 Inventory 100 units at $6 each 4 Sale 80 units at $8 each 11 Purchase 150 units at S6.50 each 13 Sale 120 units at S8.75 each 20 Purchase 160 units at S7 each 27 Sale 100 units at S9 each Chippewas uses the FIFO cost How assumption. All purchases and sales are on account. Assume C hippewas uses a perpetual system all necessary journal entries, including the end of- month closing entry to record cost of goods sold. A physical count indicates that the ending inventory for January is 110 units. Compute gross profit. Prepare all necessary journal entries..Explanation / Answer
Answer to E8-6:
Missing Amounts:
S.No.
Particulars
2011
2012
2013
1
Sales Revenue
$290000
$?
$410000
2
Sales Returns & Allowances
$6000
$13000
$?
3
Net Sales
$?
$347000
$?
4
Beginning Inventory
$20000
$32000
$?
5
Ending Inventory
$?
$?
$?
6
Purchases
$?
$260000
$298000
7
Purchase Returns & Allowances
$5000
$8000
$10000
8
Freight-in
$8000
$9000
$12000
9
Cost of goods sold
$238000
$?
$303000
10
Gross Profit on Sales
$46000
$91000
$97000
Sales Revenue in 2012:
Sales Revenue – Sales Returns & Allowances = Net Sales
Sales Revenue - $13000 = $347000
Sales Revenue = $347000 + $13000
Sales Revenue = $360000
Sales Revenue in 2012 = $360000
Net Sales in 2011:
Sales Revenue – Sales Returns & Allowances = Net Sales
$290000 - $6000 = Net Sales
$284000 = Net Sales
Net Sales in 2011 = $284000
Cost of goods sold in 2012:
Net Sales – Cost of Goods Sold = Gross Profit
$347000 – Cost of Goods Sold = $91000
Cost of Goods Sold = $347000 - $91000
Cost of Goods Sold = $256000
Cost of Goods Sold in 2012 = $256000
Ending Inventory in 2012:
Cost of Goods Sold
= Beginning Inventory +Purchases – Purchase Returns & Allowances + Freight-in – Ending Inventory
This implies,
$256000 = $32000 + $260000 - $8000 + $9000 – Ending Inventory
Ending Inventory = $37000
Ending Inventory in 2012 = $37000
Ending Inventory in 2011:
Ending Inventory in 2011 = Beginning Inventory in 2012
Ending Inventory in 2011 = $32000
Purchases in 2011:
Cost of Goods Sold
= Beginning Inventory +Purchases – Purchase Returns & Allowances + Freight-in – Ending Inventory
This implies,
$238000 = $20000 + Purchases - $5000 + $8000 - $32000
Purchases = $247000
Purchases in 2011 = $247000
Net Sales in 2013:
Net Sales – Cost of Goods Sold = Gross Profit
Net Sales - $303000 = $97000
Net Sales = $97000 + $303000
Net Sales = $400000
Net Sales in 2013 = $400000
Sales Returns & Allowances in 2013:
Sales Revenue – Sales Returns & Allowances = Net Sales
$410000 – Sales Returns & Allowances = $400000
Sales Returns & Allowances = $410000 - $400000
Sales Returns & Allowances = $10000
Sales Returns & Allowances in 2013 = $10000
Beginning Inventory in 2013:
Beginning Inventory in 2013 = Ending Inventory in 2012
Beginning Inventory in 2013 = $37000
Ending Inventory in 2013:
Cost of Goods Sold
= Beginning Inventory +Purchases – Purchase Returns & Allowances + Freight-in – Ending Inventory
This implies,
$303000 = $37000 + $298000 - $10000 + $12000 – Ending Inventory
Ending Inventory = $34000
Ending Inventory in 2013 = $34000
Missing Entries:
2011:
Net Sales in 2011 = $284000
Ending Inventory = $32000
Purchases = $247000
2012:
Sales Revenue = $360000
Ending Inventory = $37000
Cost of Goods Sold = $256000
2013:
Sales Returns & Allowances = $10000
Net Sales = $400000
Beginning Inventory = $37000
Ending Inventory = $34000
Answer to E8-9:
Answer to (a):
Journal Entries using perpetual inventory system:
Date
Particulars
Debit
Credit
January 4th
Accounts Receivable a/c Dr
To Sales a/c (80*8)
[Being Sales made on credit]
$640
$640
Cost of goods sold a/c Dr
To Inventory a/c (80*6)
[Being Inventory reduced due to sale]
$480
$480
January 11th
Purchases a/c (150*6.5) Dr
To Accounts Payable a/c
[Being Sales made on credit]
$975
$975
Inventory a/c Dr
To Cost of Goods Sold a/c
[Being Inventory reduced due to sale]
$975
$975
January 13th
Accounts Receivable a/c Dr
To Sales a/c (120*8.75)
[Being Sales made on credit]
$1050
$1050
Cost of goods sold a/c Dr
To Inventory a/c ((20*6)+(100*6.5))
[Being Inventory reduced due to sale]
$770
$770
January 20th
Purchases a/c (160*7) Dr
To Accounts Payable a/c
[Being Sales made on credit]
$1120
$1120
Inventory a/c Dr
To Cost of Goods Sold a/c
[Being Inventory reduced due to sale]
$1120
$1120
January 27th
Accounts Receivable a/c Dr
To Sales a/c (100*9)
[Being Sales made on credit]
$900
$900
Cost of goods sold a/c Dr
To Inventory a/c ((50*6.5) + (50*7))
[Being Inventory reduced due to sale]
$675
$675
Answer to (b):
Computation of Gross Profit:
Beginning Inventory = 100 *6 = $600
Purchases = (150 * 6.5) + (160*7) = $975 + $1120 = $2095
Ending Inventory = 110*7 = $770
Cost of Goods Sold:
Cost of Goods Sold
= Beginning Inventory + Purchases – Ending Inventory
= $600 + $2095 - $770
= $1925
Sales = (80*8) + (120*8.75) + (100*9) = $640 + $1050 + $900 = $2590
Gross Profit = Sales – Cost of Goods Sold
= $2590 - $1925
= $665
Gross Profit = $665
Answer to (c):
Necessary journal Entries:
Date
Particulars
Debit
Credit
January 1st
Accounts Receivable a/c Dr
To Sales a/c
[Being Sales made on account]
$640
$640
January 11th
Purchases a/c Dr
To Accounts Payable a/c
[Being Purchases made on credit]
$975
$975
January 13th
Accounts Receivable a/c Dr
To Sales a/c
[Being Sales made on account]
$1050
$1050
January 20th
Purchases a/c Dr
To Accounts Payable a/c
[Being Purchases made on credit]
$1120
$1120
January 27th
Accounts Receivable a/c Dr
To Sales a/c
[Being Sales made on account]
$900
$900
S.No.
Particulars
2011
2012
2013
1
Sales Revenue
$290000
$?
$410000
2
Sales Returns & Allowances
$6000
$13000
$?
3
Net Sales
$?
$347000
$?
4
Beginning Inventory
$20000
$32000
$?
5
Ending Inventory
$?
$?
$?
6
Purchases
$?
$260000
$298000
7
Purchase Returns & Allowances
$5000
$8000
$10000
8
Freight-in
$8000
$9000
$12000
9
Cost of goods sold
$238000
$?
$303000
10
Gross Profit on Sales
$46000
$91000
$97000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.