| # of | unit cost or | ||
| items | sale price | ||
| August 1 | Opening balance | 60 | $18 |
| August 5 | Purchase | 40 | $20 |
| August 7 | Purchase of August 5 items returned | -5 | |
| August 10 | Sale | 75 | $40 |
| August 12 | Purchase | 25 | $24 |
| August 17 | Sale | 20 | $50 |
| August 24 | Purchase | 35 | $25 |
Use an inventory cost chart and an accounting chart to analyze the above transactions, and then answer the questions below.
Where you are asked to enter a percentage, you may enter it in any of several ways. For example, 78 percent can be entered as 78%, .78, 0.78, or 78.
Dollar figures should be entered WITHOUT dollar signs, commas, or decimal points.
Question 32 (2 points)
How will the August 5 purchase of inventory be recorded? Select all that apply. (2 marks)
Question 32 options:
| a)decrease Cost Of Goods Sold | |
| b)increase Accounts Payable | |
| c)increase Cost Of Goods Sold | |
| d)increase Purchases | |
| e)decrease Cash | |
| f)increase Inventory |
Question 33 (2 points)
How will the August 7 purchase return be recorded? Select all that apply. (2 marks)
Question 33 options:
| a)decrease Cost Of Goods Sold | |
| b)increase Purchase Returns | |
| c)decrease Purchases | |
| d)decrease Inventory | |
| e)decrease Cash | |
| f)decrease Accounts Payable | |
| g)increase Cost Of Goods Sold | |
| h)increase Inventory |
Question 34 options:
What is the value of the inventory after the August 7 transaction?
Question 35 (4 points)
How will the August 10 sale be recorded? Select all that apply. (4 marks)
Question 35 options:
| a)increase Inventory | |
| b)decrease Cash | |
| c)increase Cost of Goods Sold | |
| d)increase Accounts Receivable | |
| e)increase Cash | |
| f)decrease Sales | |
| g)decrease Inventory | |
| h)increase Sales | |
| i)decrease Cost of Goods Sold | |
| j)decrease Accounts Receivable |
Question 36 options:
What amount of cost of goods sold will be recorded on August 10?
Question 37 options:
What is the value of the inventory after the August 10 transaction?
Question 38 options:
What is the gross profit percentage on the August 10 sale?
Question 39 options:
What is the amount of gross profit on the August 10 sales?
Question 40 options:
What is the value of the inventory after the August 12 transaction?
Question 41 options:
What amount of cost of goods sold will be recorded on August 17?
Question 42 options:
What is the value of the inventory after the August 17 transaction?
Question 43 options:
What is the gross profit percentage on the August 17 sale?
Question 44 options:
What is the amount of gross profit on the August 17 sale?
Question 45 options:
What is the value of the inventory after the August 24 transaction?
Question 46 options:
What is the total revenue for the month?
Question 47 (2 points)
Question 47 options:
What is the total gross profit for the month? (2 marks)
Question 48 options:
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)
Question 49 options:
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
| ans 32 | ||||
| Entry is | ||||
| Inventory dr | ||||
| Accounts Payable cr | ||||
| Correct option | ||||
| f)increase Inventory | ||||
| b) increase Accounts Payable | ||||
| ans 33 | ||||
| Entry is | ||||
| Accounts Payable dr | ||||
| Inventory cr | ||||
| Correct option | ||||
| d) decrease Inventory | ||||
| f) increase Accounts Payable | ||||
| ans 34 | ||||
| Value of inventory is after August 7 | 1780 | |||
| items | Unit cost or sale price | Total | ||
| Aug-01 | Opening | 60 | 18 | 1080 |
| balance | ||||
| Aug-05 | Purchase | 40 | 20 | 800 |
| Aug-07 | Purchase return | -5 | 20 | -100 |
| 95 | 1780 | |||
| ans 35 | ||||
| The entries are | ||||
| Accounst Receivable Dr | ||||
| Sales Cr | ||||
| Cost of goodsold Dr | ||||
| Inventory Dr | ||||
| c) | increase Cost of Goods Sold | |||
| g) | decrease Inventory | |||
| d) | increase Accounts Receivable | |||
| h) | increase Sales | |||
| ans 36 | ||||
| Cost ofgood sold recorded is | 1380 | |||
| items | Unit cost or sale price | Total | ||
| Aug-01 | Opening | 60 | 18 | 1080 |
| balance | ||||
| Aug-07 | Purchase | 15 | 20 | 300 |
| 75 | 1380 | |||
| ans 37 | ||||
| value of the inventory after the August 10 | 400 | |||
| ans 38 | ||||
| gross profit percentage on the August 10 sale | ||||
| (3000-1380)/3000*100 | 54 | % | ||
| ans 39 | ||||
| Gross profit is | ||||
| 3000-1380 | 1620 | |||
| ans 40 | ||||
| value of the inventory after the August 12 transaction | 900 | |||
| items | Unit cost or sale price | Total | ||
| Aug-07 | Purchase | 15 | 20 | 300 |
| balance | ||||
| Aug-12 | Purchase | 25 | 24 | 600 |
| 40 | 900 | |||
| ans 41 | ||||
| cost of goods sold will be recorded on August 17 | 420 | |||
| items | Unit cost or sale price | Total | ||
| Aug-07 | Purchase | 15 | 20 | 300 |
| balance | ||||
| Aug-12 | Purchase | 5 | 24 | 120 |
| 20 | 420 | |||
| ans 42 | ||||
| value of the inventory after the August 17 transaction | 480 | |||
| (20*24) | ||||
| ans 43 | ||||
| gross profit percentage on the August 17 sale | ||||
| (1000-420)/1000*100 | 58 | % | ||
| ans 44 | ||||
| Gross profit | 580 | |||
| as 45 | ||||
| value of the inventory after the August 24 transaction | 1355 | |||
| Aug-12 | Purchase | 20 | 24 | 480 |
| Aug-24 | Purchase | 35 | 25 | 875 |
| 55 | 1355 | |||
| ans 46 | ||||
| Total revenue (3000+1000) | 4000 | |||
| ans 47 Total gross profit | ||||
| 580+1620 | 2200 | |||
| ans 48 | ||||
| We need adjust for loss in inventoy | ||||
| Cost 1355-(55*20) | 255 | |||
| Decrease the inventory by -$255 | ||||
| ans 49 | ||||
| No adjsutment required |