Shelly’s Shampoo ended October with inventory of $2,000. Shelly’s purchased $38,000 of inventory during November and...

Shelly’s Shampoo ended October with inventory of $2,000. Shelly’s purchased $38,000 of inventory during November and had $6,000 of inventory on hand at the end of November. Complete the T account for Shelly’s Inventory. How much inventory did they sell during October? ___________________ If they sold that inventory for $50,000, how much revenue did they have? _______________What is their Gross Margin? _______________

Write the journal entry to record Shelly’s purchases:

Write the journal entry to record Shelly’s revenue:

Write the journal entry to record Shelly’s expense:

Expert Solution

Inventory
Beg. Bal.	2,000.00	32,000.00	Cost of Goods Sold
Purchase	38,000.00

End. Bal.	6,000.00

Inventory Sold during November = $32,000

Revenue of November = Sales Revenue = $50,000

Gross Margin = $50,000 (Sales) - $32,000 (Cost of Goods Sold)
Gross Margin = $18,000

Gross Margin Rate = $18,000 / $50,000
Gross Margin Rate = 36%

Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.

1	Inventory	38,000.00
	Accounts Payable / Cash		38,000.00
	(record the inventory purchased)

2	Accounts Receivable / Cash	50,000.00
	Sales Revenue		50,000.00
	(record the sales done)

3	Cost of Goods Sold	32,000.00
	Inventory		32,000.00
	(record the cost of inventory sold)

ekkarill92 answered 1 year ago

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