Question

Blossom Jewelry reported the following income statement data for a 2-year period. 2019 2020 HK$2,150,000 HK$2,550,000 Sales revenue Cost of goods sold Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory Cost of goods sold Gross profit 321,000 1,820,000 2,141,000 440,000 1,701,000 HK$449,000 440,000 2,127,000 2,567,000 534,000 2,033,000 HK$517,000 Blossom uses a periodic inventory system. The inventories at January 1, 2019, and December 31, 2020, are correct. However, the ending inventory at December 31, 2019, was understated HK$60,000. Prepare correct income statement data for the 2 years. 2019 2020 Sales HK$ HK$ Cost of goods sold Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory Cost of goods sold Gross profit HK$ HK$

1)

Answer 1

		2019	2020
(a)	Sales revenue	2,150,000	2,550,000
	Cost of goods sold
	Beginning inventory	321,000	500,000
	Cost of goods purchased	1,820,000	2,127,000
	Cost of goods available for sale	2,141,000	2,627,000
	Ending inventory	500,000	534,000
	Cost of goods sold	1,641,000	2,093,000
	Gross Profit	509,000	457,000
		Feb
	Sales revenue	309,000
	Cost of goods sold
	Beginning inventory	4,635
	Cost of goods purchased	203,734
	Cost of goods available for sale	208,369
	Ending inventory	25,956
	Cost of goods sold	182,413
	Add: freight in	2,987
	Gross Profit	123,600
		40.00%	(123,600/309,000)
	The estimated total inventory	66,126
	Inventory lost in fire in march	$46,288	(66126*70%)
Workings
	Sales	$267,800
	Gross profit	$107,120	(257,800*40%)
	Cost of goods sold	$160,680
	COST of goods sold = Beg. Inventory+cost of inventory purchase+freight in-ending inventory
	160,680 = 25,956 + 196,730 + 4120 - Ending inventory
	Ending inventory = 25,956 + 196,730 + 4120 - 160,680
	Ending inventory = 66,126

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