Question

[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 $500 each. Jul. 17 Purchased 50 watches for $7,500 ($150 per watch) on account. Jul. 31 Sold 40 watches for $20,000 cash. Aug. 12 Purchased 40 watches for $6,400 ($160 per watch) cash. Aug. 22 Sold 30 watches for $15,000 on account. Sep. 19 Paid for watches purchased on July 17. Sep. 27 Receive cash of $9,000 for watches sold on account on August 22. Oct. 27 Purchased 80 watches for $13,600 ($170 per watch) cash. Nov. 20 Sold 90 watches for $45,000 cash. Dec. 4 Purchased 100 watches for $18,000 ($180 per watch) on account. Dec. 8 Sold 40 watches for $20,000 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.

1-b. Prepare the gross profit section of a partial income statement for transactions related to MU watches.

Answer 1

Total Sales:	QTY	VALUE	Total Purchases	QTY	VALUE
31-Jul	40	20000	17-Jul	50	7500
22-Aug	30	15000	12-Aug	40	6400
20-Nov	90	45000	27-Oct	80	13600
8-Dec	40	20000	4-Dec	100	18000
	200	100000		270	45500
			Closing Stock	70	12600
1)
a: Sales revenue = $100000
Cost of Goods sold = 45500 - 12600 = 32900
Ending Inventory = 12600
b: Partial Income Statement:
Sales	100000
Less: COGS	32900
Gross Profit	67100