Burlington Wholesale Inc. had the following inventory transactions for one month. The company uses a perpetual system and FIFO. All purchases and sales are on account.

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# ofunit cost or
itemssale price
January 1Opening
balance
40$20
January 5Purchase20$22
January 7Purchase
of January 5
items returned
-5
January 10Sale50$40
January 12Purchase25$24
January 17Sale20$50
January 24Purchase35$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

PurchaseIssueBalance
DateUnitsRateTotalUnitsRateTotalUnitRateTotal
Jan,14020800
Jan,520224404020800
2022440
1240
Jan,75221104020800
1522330
1130
Jan,104020800
1022220522110
1020
Jan,122524600522110
2524600
710
Jan,17522110
15243601024240
470
Jan,2435258751024240
3525875
Total16001115

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