Question

Accounting records for Ontario Corporation yield the following data for the year ended June 30, 2016 (assume sales returns are non-existent):
Inventory, June 30, 2015 ........................................................... $ 8,000
Purchases of inventory (on account) .............................................. 66,000
Sales of inventory-81 % on account; 19% for cash (cost $52,000) .......... 99,000
Inventory at FIFO, June 30, 2016 ................................................. 22,000
Requirements
1. Journalize Ontario's inventory transactions for the year under the perpetual system.
2. Report ending inventory
, sales, cost of goods sold, and gross profit on the appropriate financial statement.

 

Answer 1

Req.1.

Perpetual System
1.	Purchases:
	Inventory................................................................	66,000
	Accounts Payable.............................................		66,000
2.	Sales:
	Cash ($99,000 × .19)..............................................	18,810
	Accounts Receivable ($99,000 × .81)....................	80,190
	Sales Revenue		99,000
	Cost of Goods Sold...............................................	52,000
	Inventory..........................................................		52,000

Req.2.

BALANCE SHEET
Current assets:
Inventory.............	$22,000
INCOME STATEMENT
Sales revenue............	$99,000
Cost of goods sold.........	52,000
Gross profit.............	$47,000