HappyHome is a factory specialized in manufacturing some ranges of home applianc
ID: 2559421 • Letter: H
Question
HappyHome is a factory specialized in manufacturing some ranges of home appliances. HappyHome is having a sale transaction selling of washing machines and freezers to a wholesale distributor, named Homy. Details of this transaction are depicted in this table:
Quantity
Unit selling price
Unit cost price
washing machine
10
SAR980
SAR450
freezer
15
SAR680
SAR350
Record financial impacts of this sale transaction for HappyHome.
N.B. Show financial impacts for all steps of the transaction in only one figure.
Quantity
Unit selling price
Unit cost price
washing machine
10
SAR980
SAR450
freezer
15
SAR680
SAR350
Explanation / Answer
Journal entry
Cash (debit) SAR 20000
sales (credit ) SAR 20000 (980*10+680*15)
Explanation :- Sale price of 10 washing machine is SAR 980 and cost is SAR450.
profit on sale of washing machine = 10 * SAR 530( SAR 980- SAR450)
= SAR 5300
Sale price of 15 freezer is SAR 680 and cost SAR 350.
Profit on sale of freezer = 15 * SAR 330 (SAR 680-SAR 350)
= SAR 4950
Total profit of HAPPYHOME = Profit on sale of washing machine and freeze = SAR 5300+ SAR 4950= SAR 10250
The retained earnings in the balance sheet of HAPPYHOME will increase by the amount of profit ie SAR 10250.
This is the only one figure impact for all steps of transaction of HAPPYHOME.
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