Question

Please complete a statement of retained earnings with the information provided. (Not all information provided may be relevant in completing the question).

		Inventory Information
Inventory on hand at the beginning of October:
	Units	Cost / unit	Total Cost
Purchase # 1	15	60	$900
Purchase # 2	25	70	1,750
	40		$2,650
	October 2018 transactions related to buying and selling widget inventory
	1-Oct	Sold 30 widgets at $125 each on credit
	3-Oct	Purchased 60 widgets at a cost of $80 per widget on credit
	10-Oct	Sold 45 widgets at $150 each on credit
	20-Oct	Purchased 40 widgets at a cost of $85 per widget on credit
	24-Oct	Sold 35 widgets at $165 each on credit
The PHYSICAL count of widget inventory on hand at October 31, 2018 shows 23 widgets at a FIFO cost of $1,955.

Beginning Inventory	Units	Cost / unit	Cost
	15	60	900
	25	70	1,750
	40		2,650

		Number of Days Outstanding
	Total	0-30	31-60	61-90	91-120	over 120
Accounts Receivable	$     163,075	$146,768	$     6,523	$     3,262	$     4,892	$     1,631
% Uncollectible		0.02	0.06	0.075	0.08	0.09
Estimated Uncollectible	$         4,109	2,935	391	245	391	147

Answer 1

Statement of Retained earning is as prepared below:

Retained earning
For the Month Ending October 31, 20XX
Particulars	Amount ($)	Amount ($)
R/E beginning		0
Add:
Net income	3,866
Less:
Dividend	0
R/E Ending		3,866

Net Income will comprise of profit earned during month by selling inventories and bad debt expense will be deducted.

Working Notes:

FIFO-Perpetual
Date	Goods Purchased				Cost of goods sold				Ending Inventory
	Units	@	Cost per unit	Cost of purchase	Units sold	@	Cost per unit	Cost of goods sold	Units	@	Cost per unit	Ending balance
Oct-01									15		60	900
									25		70	1,750
Balance									40			2,650
Oct-01					15		60	900	10		70	700
					15		70	1,050
Balance									10			700
Oct-03	60		80	4,800					10		70	700
									60		80	4,800
Balance									70			5,500
Oct-10					10		70	700
					35		80	2,800	25		80	2,000
Balance									25			2,000
Oct-20	40		85	3,400					25		80	2,000
									40		85	3,400
Balance									65			5,400
Oct-24					25		80	2,000	30		85	2,550
					10		85	850
Balance									30			2,550
	100			8,200	110			8,300	30			2,550

	FIFO
Sales
30*125	3750
45*150	6750
35*165	5775
Cost of goods sold	8,300
Gross Profit	7,975