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 $501 each. Jul. 17 Purchased 51 watches for $7,701 ($151 per watch) on account. Jul. 31 Sold 41 watches for $20,541 cash. Aug. 12 Purchased 41 watches for $6,601 $161 per watch) cash. Aug. 22 Sold 31 watches for $15,531 on account. Sep. 19 Paid for watches purchased on July 17. Sep. 27 Receive cash of $9,600 for watches sold on account on huqust 22. Oct. 27 Purchased 81 watches for $13,851 ($171 per watch) cash. Nov. 20 Sold 91 watches for $45,591 cash. Dec. 4 Purchased 102 watches for $18.462 ($181 per watch) on account. Dec 8 Sold 41 watches for $20,541 on account. 2. Late in December, the next generation of multiuse (MU II) watches is released. In addition to all of the features of the MU watch, the MU II watches are equipped with a global positioning system (GPS) and have the ability to download and play songs and videos off the Internet. The demand for the original MU watches is greatly reduced. As of December 31, the estimated net realizable value of MU watches is only $101 per watch. a. Record any necessary adjustment on December 31, 2022, related to this information. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the adjustment for inventory. Note: Enter debits before credits. General Journal Debit Credit Date Dec 31, 2022 Record entry Clear entry View general Journal

Answer 1

1)
Date	Account Titles and Explanation	Debit	Credit
Jul. 17	Purchases	$7,701
	Accounts Payable		$7,701
	(To record the purchase of inventory on account)
Jul. 31	Cash	$20,541
	Sales Revenue		$20,541
	(To record the sale of 41 units)
Aug. 12	Purchases	$6,601
	Cash		$6,601
	(To record the purchase of inventory by cash)
Aug. 22	Accounts Receivable	$15,531
	Sales Revenue		$15,531
	(To record the sale of 31 units)
Sep. 19	Accounts Payable	$7,701
	Cash		$7,701
	(To record the payment made to suppliers)
Sep. 27	Cash	$9,600
	Accounts Receivable		$9,600
	(To record the collection of cash from accounts)
Oct. 27	Purchases	$13,851
	Cash		$13,851
	(To record the purchase of inventory by cash)
Nov. 20	Cash	$45,591
	Sales Revenue		$45,591
	(To record the sale of 91 units)
Dec. 4	Purchases	$18,462
	Accounts Payable		$18,462
	(To record the purchase of inventory on account)
Dec. 8	Accounts Receivable	$20,541
	Sales Revenue		$20,541
	(To record the sale of 41 units)
Dec. 31	Merchandise Inventory	$12,851
	Purchases (51 - 41 + 41 - 31 + 81 - 91 + 102 - 41 = 71 * $181)		$12,851
	(To record the adjustment of ending inventory)
2-a)
Date	Account Titles and Explanation	Debit	Credit
Dec. 31	Loss in the value of Inventory ($181 - $101 = $80 * 71)	$5,680
	Merchandise Inventory		$5,680
	(To record the loss in the value of ending inventory)
2-b) Inventory to be reported on the balance sheet is $7,171 ($12,851 - $5,680).
2-c)
	GREAT ADVENTURES, INC.
	Partial Income Statement
	For the Year Ended December 31, 2022
	Sales Revenue ($20,541 + $15,531 + $45,591 + $20,541)	$102,204
	Less: Cost of Goods Sold (see working note)	($33,564)
	Gross Margin	$68,640

Date	Units (a)	Rate (b)	Amount (a*b)
Jul. 31	41	$151	$6,191
Aug. 22	10	$151	$1,510
	21	$161	$3,381
Nov. 20	20	$151	$3,020
	71	$171	$12,141
Dec. 8	10	$171	$1,710
	31	$181	$5,611
Total Cost of Goods Sold			$33,564