4) Cypher Inc. had the following information for the year Inventory, January 1 I

Question

4) Cypher Inc. had the following information for the year Inventory, January 1 Inventory Purchases (on account) Sales Revenue (cash sales) Cost of Inventory Sold (related to cash sales) Sales Revenue (sales on account) $4,000 25,000 33,000 13,000 27,000 Cost of Inventory Sold (related to sales on account) Inventory, December 31 (count) 10,000 5,000 a) Make all necessary journal entries to record the inventory transactions for the year, b) Calculate Cypher's gross profit for the year. c) Calculate Cypher's gross profit percentage and inventory turnover for the year. d) The net realizable value of Cypher's inventory at December 31 is $4,800. Does this change the financial statements? Why or why not?

Explanation / Answer

a) Journal entries:

b) Gross Profit

c) Gross Profit percentage

d) If the net realizable value of inventory is $4,800 then the current asset section in the balance sheet will reduce.

Date Particulars L.F Amount ($) Amount ($) 1 Inventory 25,000 Accounts Payable 25,000 2 Cash 33,000 Sales Revenue 33,000 Cost of goods sold 13,000 Inventory 13,000 3 Account Receivable 27,000 Sales Revenue 27,000 Cost of goods sold 10,000 Inventory 10,000

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