Question

S6-1 (similar to) Marcy, Inc., purchased inventory costing $125,000 and sold 70% of the goods for $177,500. All purchases and sales were on account. Marcy later collected 10% of the accounts receivable. 1. Journalize these transactions for Marcy, which uses the perpetual inventory system. 2. For these transactions, show what Marcy will 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 Marcy, which uses the perpetual inventory system. Journalize the purchase of inventory. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Accounts Debit Credit

S6-1 (similar to) Marcy, Inc., purchased inventory costing $125,000 and sold 70% of the goods for $177,500. All purchases and sales were on account. Marcy later collected 10% of the accounts receivable. 1. Journalize these transactions for Marcy, which uses the perpetual inventory system. 2. For these transactions, show what Marcy will 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 Marcy, which uses the perpetual inventory system. Journalize the purchase of inventory. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Accounts Debit Credit

Answer 1

Answer 1

	Debit	Credit
Inventory	125000
Accounts Payable/Bank A/c		125000
(Being transaction for purchase of goods recorded)
Accounts Receivable	177500
Sales		177500
(Sale of goods on account recorded)
Cost of Goods Sold	87500
Inventory		87500
(Recording cost of goods sold 70% of purchase amount)
Bank A/c	17750
Accounts Receivable		17750
(10% of accounts receivable received)

Answer 2

Extract of Statement of Profit and Loss Account
Sales Revenue	177500
Cost of Goods Sold	87500
Gross Profit	90000

Inventory will be shown at 37,500 (125000-87500) and will be shown as Current Asset in the Balance Sheet