Part I (16 marks) Yvonne Ltd. uses a periodic inventory system. At the end of 20
ID: 2570951 • Letter: P
Question
Part I (16 marks)
Yvonne Ltd. uses a periodic inventory system. At the end of 2016, the accounting records include the following information:
Inventory, 31 December 2015
$22,000
Inventory, 31 December 2016
$16,000
Purchases
$160,000
Net sales
$200,000
Required:
(a) Compute (i) the cost of goods sold; and (ii) gross profit for the year of 2016.
Show your workings. (6 marks)
(b)
Prepare two closing entries to create the Cost of Goods Sold account and update
the Inventory account. (10 marks)
Part II (12 marks)
Eva Ltd. uses a perpetual inventory method. Prepare the journal entries for the following transactions:
1 June
Paid $200 owed to Sis Company.
3
Purchased goods from North Company for $900 on account.
4
Returned $80 of the goods to North Company.
17
Paid the amount owed to North Company.
20
Sold all the goods on hand from North Company with gross profit rate of 20%. The payment will be made within 30 days.
Inventory, 31 December 2015
$22,000
Inventory, 31 December 2016
$16,000
Purchases
$160,000
Net sales
$200,000
Explanation / Answer
a) Compute following :
i) cost of goods sold = Beginning inventory+Purchase-Ending inventory
= 22000+160000-16000
Cost of goods sold = 166000
ii) Gross profit = Sales-cost of goods sold
= 200000-166000
Gross profit = 34000
(b)Prepare two closing entries to create the Cost of Goods Sold account and update
the Inventory account
Date accounts & explanation debit credit Inventory (ending) 16000 Cost of goods sold 166000 Inventory (Beginning) 22000 Purchase a/c 160000 (To record closing entry)Related Questions
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