Question

Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2022. All watches are sold for $495 each. Jul. 17 Purchased 45 watches for $6,525 ($145 per watch) on account. Jul. 31 Sold 35 watches for $17,325 cash. Aug. 12 Purchased 35 watches for $5,425 ($155 per watch) cash. Aug. 22 Sold 25 watches for $12,375 on account. Sep. 19 Paid for watches purchased on July 17. Sep. 27 Receive cash of $18,000 for watches sold on account on August 22. Oct. 27 Purchased 75 watches for $12,375 ($165 per watch) cash. Nov. 20 Sold 85 watches for $42,075 cash. Dec. 4 Purchased 110 watches for $19,250 ($175 per watch) on account. Dec. 8 Sold 35 watches for $17,325 on account. Required: 1-a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2022, assuming Suzie uses FIFO to account for inventory. 1-b. Prepare the gross profit section of a partial income statement for transactions related to MU watches.

Answer 1

Answer

1)

Sales Revenue
Date	Quantity(nos)	unit price	Total
31-Jul	35	$        495	$ 17,325
22-Aug	25	$        495	$ 12,375
20-Nov	85	$        495	$ 42,075
8-Dec	35	$        495	$ 17,325
		Total	$ 89,100

Total sale revenue =$ 89,100

		Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit cost	Total Cost	Quantity	Unit cost	Total Cost	Quantity	Unit cost	Total Cost
17-Jul	45	$      145	$        6,525				45	$        145	$    6,525
31-Jul				35	$        145	$    5,075	10	$        145	$    1,450
12-Aug	35	$      155	$        5,425				10	$        145	$    1,450
							35	$        155	$    5,425
22-Aug				10	$        145	$    1,450
				15	$        155	$    2,325	20	$        155	$    3,100
27-Oct	75	$      165	$      12,375				20	$        155	$    3,100
							75	$        165	$ 12,375
20-Nov				20	$        155	$    3,100
				65	$        165	$ 10,725	10	$        165	$    1,650
4-Dec	110	$      175	$      19,250				10	$        165	$    1,650
							110	$        175	$ 19,250
8-Dec				10	$        165	$    1,650
				25	$        175	$    4,375	85	$        175	$ 14,875
				Cost of Good Sold		$ 28,700
31-Dec							85	$        175	$ 14,875

Cost of Goods Sold =$28,700

Ending inventory =$ 14875( 85 units @$175 )

2)Income Statement

Income statement
Total revenue	$        89,100
(less)cost of goods sold	$        28,700
Gross Profit	$        60,400