Question

Required Information The following information applies to the questions displayed below.] 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. Aur. 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 $42.875 cash. Dec. 4 Purchased 110 watches for 519,250 ($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 Sales Revenue Cast of Goods Sold Ending Inventory 1-b. Prepare the gross profit section of a partial income statement for transactions related to MU watches. GREAT ADVENTURES, INC. Partial Income Statement For the Year Ended December 31, 2022

Answer 1

Calculation of unit= No. of watches! Cost of Ending Inventory (FIFO ) I sales (cost of goods and cow Balance Mes) amount 45 6,585 unit Purchases unit pate Amount/u C$) C$) unit Amount ($) Year Jul. 17 45 145 $6,525 Jul 31 5,075 145 10 1,450 (45-35) (6525- Aug, 12 35 155 15,425 1,450 2o Aug. 22 45(= 10 +35) 6,875 3100 IS1552,325) cus-25) (=25 ) (= 3,775) 115,475 1131007 12375/ 95 Oct. 27 75 165 112,375

1o Nov. 20 1557 165 3,100 16,725 (= 13,825) 1.1,650 |(1545- (13825) (=85) Dec.4 110 175 119,250 1120 (= 120+10) 20,900 (1650+ t 19250) Decog 1071657 25 || 175 116507 85 (120-36) 14,875 4,375 (26025) (=35) Cost of goods sold $28,700

Partial Income Statement Solution 1-0 Saly Revenue 89,100 (1808$495) less: Cast of Goods sold (28,700) Gross Profit $60,400 Ending Inventory is 85 unit with to tal cost of $14,875 Cost of Ending. Inventory $14,875 solution 1-a | sales Revenue = $89 100 (180 unit X $495) Cost of goods sold $28 760 e (180 unit) Ending Inventory = $14,875 188 unit)

solution 2-a As per GAAP, Ending Inventory should be value at lower of lost or net realisable value. Estimated het Realisable value of watch - $95 per watch units in ending Inventory = 85 units Estimated Net Realisable 8,075 value (85x895) Unit you Cost of Ending Inventory 14,875 tms OT Jole Doo to → Ending Inventory should be valued blod at $8075 (lower cof NRV or tories Cost Cost reduction is ending Inventory valuation = $6,800 (14875-8075)

Adjusting enby for Account to valuation Cost of goods sold w Merchandise Inventory sabit Exedrig 6,800 16,800 To allovaldos Inventors WP- solution-2 b ort al N N. MU Inventory = $8,075 20, solution-cl Que to loss in Inventory valuation, there is an Increase in cost of goods sold of Els .$ 6,800 pastrar upao Revised Cost of goods sold $28,700 + $6,500 - $35,50 od

Partial Income Statement Less! Sales Revenue 89,00 (180x495) Revised Cost of goods $35,500 sold updated / Revised Cross , $53,600 Profit