Now that operations for outdoor clinics and TEAM events are running smoothly, Su

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 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 2016. All watches are sold for $299 each.

  

  Sold 39 watches for $11,661 on account.

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 2016. All watches are sold for $299 each.

Required: 1-a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2016 assuming Suzie uses FIFO to account for inventory Sales revenue Cost of goods sold Ending inventory 1-b. Prepare the gross profit section of a partial income statement for transactions related to MU watches GREAT ADVENTURES, INC Partial Income Statement For the Year Ended December 31. 2018 Gross profit

Explanation / Answer

1-a.

1-b. Great Adventures Inc.

Partial Income Statement

For the period ended December 31, 2016

2-a.

b. MU inventory should be reported at $ 8,811 in the balance sheet as of December 31, 2016.

c. Great Adventures Inc

Partial Income Statement

For the period ending December 31, 2016

Cost of goods sold = Beginning Inventory + Purchases - Ending Inventory = 0 + $ 47,975 - $ 8,811 = $ 39,164

Sales revenue $ 58,604 Cost of goods sold $ 32,044 Ending inventory $ 15,931

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