Question

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 clinicparticipants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometricpressure. 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 watchesavailable for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2013. All watches aresold for $309 each.

Jul. 17 Purchased 57 watches for $8,037 ($141 per watch) on account.
Jul. 31 Sold 44 watches for $13,596 cash.
Aug. 12 Purchased 43 watches for $6,708 ($156 per watch) cash.
Aug. 22 Sold 22 watches for $6,798 on account.
Sep. 19 Paid for watches ordered on July 17.
Sep 27 Received full payment for watches sold on account on August 22.
Oct. 27 Purchased 81 watches for $13,770 ($170 per watch) cash.
Nov. 20 Sold 105 watches for $32,445 cash.
Dec. 4 Purchased 104 watches for $18,096 ($174 per watch) cash.
Dec. 8 Sold 32 watches for $9,888 on account.




Required:
a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2013, assuming Suzie uses FIFO to account for inventory. (Omit the "$" sign inyour response.)


Sales revenue $
Cost of goods sold $
Ending inventory $

b. Prepare the gross profit section of a partial income statement for transactions related to MU watches. (Amounts to be deducted should be indicated with minus sign.Omit the "$" sign in your response.)

GREAT ADVENTURES, INC.
Partial Income Statement
For the year ended December 31, 2013
$


$








2. Late in December, the next generation of multiuse (MU II) watches is released. In addition to all of the features of the MU watch, the MU II watches are equippedwith a global positioning system (GPS) and have the ability to download and play songs and videos off the internet. The demand for the original MU watches is greatlyreduced. As of December 31, the estimated market value of MU watches is only $111 per watch.

a. Record any necessary entry on December 31, 2013, related to this information. (Omit the "$" sign in your response.)

Date General Journal Debit Credit
Dec 31


b. For what amount would MU inventory be reported in the December 31, 2013, balance sheet? (Omit the "$" sign in your response.)

MU Inventory $

c. Prepare an updated gross profit section of a partial income statement accounting for this additional information. (Amounts to be deducted should be indicated withminus sign. Omit the "$" sign in your response.)

GREAT ADVENTURES, INC.
Partial Income Statement
For the year ended December 31, 2013
$


$




Seen 1 years ago byWilson Anderson

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