Yvonne Ltd. uses a periodic inventory system. At the end of 2016, the accounting
ID: 2573421 • Letter: Y
Question
Yvonne Ltd. uses a periodic inventory system. At the end of 2016, the accounting records include the following information: Inventory, 31 December 2015$22,000 Inventory, 31 December 2016 16,000 Purchases Net sales S160,000 $200,000 Required: Compute (i) the cost of goods sold; and (ii) gross profit for the year of 2016. Show your workings. (a) (6 marks) Prepare two closing entries to create the Cost of Goods Sold account and update the Inventory account. (b) (10 marks) Part II (12 marks) Eva Ltd. uses a perpetual inventory method. Prepare the journal entries for the following transactions: 1 June Paid $200 owed to Sis Company. 4 17 20 Purchased goods from North Company for $900 on account. Returned $80 of the goods to North Company. Paid the amount owed to North Company Sold all the goods on hand from North Company with gross profit rate of20%. The payment will be made within 30 days.Explanation / Answer
Yvonne Ltd.
(a)(i) Cost of goods sold = Beginning inventory + Purchases - Ending inventory = $22000 + $160000 - $16000 = $166000
(a)(ii) Gross profit for the year 2016 = Net Sales - Cost of goods sold = $200000 - $166000 = $34000
(b)
Eva Ltd.
Date Account Titles Debit Credit Dec 31, 2016 Cost of goods sold 22000 Inventory (Beginning) 22000 Dec 31, 2016 Inventory (Ending) 16000 Cost of goods sold 16000Related Questions
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