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a) Operating Cycle of a merchandising Company
Generally, the operating cycle of a company involved in merchandising is
Purchases of Materials - Payments for purchases - Conversion costs - Inventory - Sale of goods - Cash collection directly Assets and Liabilities directly affected by this cycle are: Inventory, Accounts payable, Accounts receivable, Cash
b) Journal entries under perpetual inventory system
Date | Particulars | Debit ($) | Credit ($) |
---|---|---|---|
Jan 2 | Inventory (Modems & Printers) | 25,000 | |
Accounts Payable | 25,000 | ||
(Peripherals purchased) | |||
Jan 6 | Accounts Receivable | 10,000 | |
Sales Revenue | 10,000 | ||
(Sales on account to Pace Corp) | |||
Jan 6 | Cost of goods sold | 6,100 | |
Inventory | 6,100 | ||
(Inventory depletion) |
C) Ending Inventory balance
Beginning inventory = $ 500,000
Add: Purchases $ 25,000
Less: Cost of goods sold ($ 6,100)
Ending inventory = $ 518,900
d) Journal entries under Periodic inventory system
Date | Particulars | Debit ($) | Credit ($) |
---|---|---|---|
Jan 6 | Inventory (Ending Inventory) | 518,900 | |
Cost of Goods Sold (Balancing Figure) | 6,100 | ||
Inventory (Beginning Inventory) | 500,000 | ||
Purchases | 25,000 | ||
(Entry at the period end) |
e) Cost of goods sold under Periodic system
Cost of goods sold = Beginning inventory + Purchases - Ending inventory
= 500,000 + 25,000 - 518,000
= $ 6,100
f) CPI may use perpetual system as it records the transactions as and when happens and can have a better track over the inventory.
g) Gross Profit
Sales = $ 10,000
Less: Cost ( $ 6,100)
Gross profit $ 3,900
Can someone assist me with this please? Thanks! Inventory to Market Value.) L06-1, LO6-2, L06-3, L06-4....
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Please show me how this is done.. thank you!! profitable and why? OJOU 20 01 pIy auN J0 STmaamA 133dva.no on inapiON LO6-3, LO6-5 Sky Probe sells state-of-the-art telescopes to individuals and organizations interested in studying the solar system. At December 31 last year, the company's inventory amounted to $250,000. Dur- ing the first week of January this year, the company made only one purchase and one sale. These transactions were as follows. EXERCISE 6.12 Comparison of Inventory Systems Jan....
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