| # of | unit cost or | ||
| items | sale price | ||
| January 1 | Opening balance | 40 | $20 |
| January 5 | Purchase | 20 | $22 |
| January 7 | Purchase of January 5 items returned | -5 | |
| January 10 | Sale | 50 | $40 |
| January 12 | Purchase | 25 | $24 |
| January 17 | Sale | 20 | $50 |
| January 24 | Purchase | 35 | $25 |
What amount of cost of goods sold will be recorded on January 10?
What is the value of the inventory after the January 10 transaction?
What is the gross profit percentage on the January 10 sale?
What is the amount of gross profit on the January 10 sale?
What is the value of the inventory after the January 12 transaction?
What amount of cost of goods sold will be recorded on January 17?
What is the value of the inventory after the January 17 transaction?
What is the gross profit percentage on the January 17 sale?
What is the amount of gross profit on the January 17 sale?
What is the value of the inventory after the January 24 transaction
What is the total revenue for the month?
What is the total gross profit for the month? (2 marks)
What is the amount of the adjustment that must be made to inventory at the end of the month if the selling price drops to $20?
Start your answer with a + sign if an increase, a – sign if a decrease, or enter 0 if no adjustment is needed. (2 marks)
What is the amount of the adjustment that must be made to inventory at the end of the month if the selling price drops to $30?
Start your answer with a + sign if an increase, a – sign if a decrease, or enter 0 if no adjustment is needed. (2 marks)
EXPERT ANSWER
| Purchase | Issue | Balance | |||||||
| Date | Units | Rate | Total | Units | Rate | Total | Unit | Rate | Total |
| Jan,1 | 40 | 20 | 800 | ||||||
| Jan,5 | 20 | 22 | 440 | 40 | 20 | 800 | |||
| 20 | 22 | 440 | |||||||
| 1240 | |||||||||
| Jan,7 | 5 | 22 | 110 | 40 | 20 | 800 | |||
| 15 | 22 | 330 | |||||||
| 1130 | |||||||||
| Jan,10 | 40 | 20 | 800 | ||||||
| 10 | 22 | 220 | 5 | 22 | 110 | ||||
| 1020 | |||||||||
| Jan,12 | 25 | 24 | 600 | 5 | 22 | 110 | |||
| 25 | 24 | 600 | |||||||
| 710 | |||||||||
| Jan,17 | 5 | 22 | 110 | ||||||
| 15 | 24 | 360 | 10 | 24 | 240 | ||||
| 470 | |||||||||
| Jan,24 | 35 | 25 | 875 | 10 | 24 | 240 | |||
| 35 | 25 | 875 | |||||||
| Total | 1600 | 1115 |
Answer –
1) Amount of Cost of Goods Sold recorded on January 10 = $1020
2) Value of Inventory after January 10 Transaction = $1020
3)
Gross Profit Percentage on January 10 Sale –
= ( Sales Revenue – Cost of Goods Sold / Sales Revenue ) X 100
= [ ( 50 Units X $40 ) – $1020 / ( 50 Units X $40 ) ] X 100
= 49%
Answer = 49%
4) Value of Inventory after January 12 Transaction = $710
5) Amount of Cost of Goods Sold recorded on January 17 = $470
6) Value of Inventory after January 17 Transaction = $240
7)
Gross Profit Percentage on January 10 Sale –
= ( Sales Revenue – Cost of Goods Sold / Sales Revenue ) X 100
= [ ( 20 Units X $50 ) – $470 / ( 20 Units X $50 ) ] X 100
= 53%
Answer = 73%
8)
Amount of Gross Profit on January,17 Transaction –
= ( Sales Revenue – Cost of Goods Sold )
= ( 20 Units X $50 ) – $470
= $530
Answer – $530
9) Value of Inventory after January 24 Transaction = $1115
10) Total Revenue for the Month –
=( Revenue of January,10 + Revenue of January,17 )
= ( 50 Units X $40 ) + ( 20 Units X $50 )
= $3000
Answer – $3000
11) Total Gross Profit of the Month –
= ( Gross Profit of January,10 + Gross Profit of January,17 )
= [ ( 50 Units X $40 ) – $1020 ] + [ ( 20 Units X $50 ) – $470 ]
= $1510
Answer – $1510