Question

Homework: 5-2 My AccountingLab: Module Five HomeWUIR Score: 0 of 3 pts < 29 of 33 (28 complete) S6-1 (similar to) Riley, Inc., purchased inventory costing $160,000 and sold 70% of the goods for $182,000. All purchases and sales were on account. Riley later collected 20% of the accounts receivable. 1. Joumalize these transactions for Riley, which uses the perpetual inventory system. 2. For these transactions, show what Riley wil report for inventory, revenues, and expenses on its financial statements at the end of the month. Report gross profit on the appropriate statement 1. Journalize these transactions for Riley, which uses the perpetual inventory system Joumaize the purchase of inventory. Record dens first, then credits. Exclude explanations from any journal entries.) Journal Accounts Debit Credit Choose from any list of enter any number in the input fields and then click Check Answer Clear All being Check Start a search

Answer 1

Requirement 1:

i. To record purchases:

Account title and Explanation	Debit	Credit
Inventory	$160,000
Accounts payable		$160,000
[To record purchase of inventory on account]

ii. To record sales:

Account title and Explanation	Debit	Credit
Accounts receivable	$182,000
Sales revenue		$182,000
[To record sales on account]
Cost of goods sold	$112,000
Inventory (160,000 x 70%)		$112,000
[To record cost of goods sold]

Requirement 2:

i.Reporting in financial statements:

Inventory to be reported in 'BALANCE SHEET'

Revenues and Expenses to be reported in 'INCOME STATEMENT'

ii. Gross profit

Income Statement
Sales revenue	$182,000
(Less): Cost of goods sold	($112,000)
Gross profit	$70,000