Bill’s Bakery’s Inventory account had a balance of $8,000 on April 1 st and a ba

Question

Bill’s Bakery’s Inventory account had a balance of $8,000 on April 1st and a balance of $13,000 on April 30th. Bill’s sold $62,000 worth of inventory for $85,000 during April. Complete the T account for Bill’s Inventory. How much Revenue does Bill’s have? _______________ How much expense? ___________________What is their Gross Margin? _______________ How much inventory did Bill’s purchase during April? ______________

Write the journal entry to record Bill’s purchases:

Write the journal entry to record Bill’s revenue:

Write the journal entry to record Bill’s expense:

Explanation / Answer

In the books of Bill Bakery

All amount in US dollars ($)

Revenue would be the amoiunt of sales i.e. 85,000.

The expense would the the amount of cost of goods sold i.e. 65,000. ( provided in the question)

Gross Margin is the difference between Revenue and cost of goods sold i.e. 23,000 ( please see below ledger accounts)

The amount of purchases would be 67,000 as per below workings ( cost of good sold add closding inventory less opening inventory).

Journal Entries :

Purchases A/c.... Dr 67,000

To cash /bank/Creditors A/c ( Being cash/credit purchases made for the month)

Cash/Bank/Debtors A/c ... Dr 85,000

To Sales A/c ( Being cash/credit sales made for the month )

The net expense would be opening inventory add purchases less closing stock i.e 8,000+67,000-13,000 = 62,000

Cost of goods sold .... Dr 62,000

To inventory A/c 62,000 ( Being goods worth 62,000 sold during the month)

Ledger Accounts :

For the month of April Dr Inventory A/c (representation of the formula)                                    Cr Opening Balance                    8,000 Cost of goods sold ( provided)                          62,000 Purchases (*)        67,000 Closing Balance                          13,000 Total                 75,000 Total                          75,000 Dr Profit & Loss A/c for the month                                    Cr Cost of Good sold                 62,000 Sales                          85,000 Gross Margin( *)        23,000 Total                 85,000 Total                          85,000

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