Question

Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2022. All watches are sold for $520 each.

Jul. 17 Purchased 53 watches for $7,950 ($150 per watch) on account.

Jul. 31 Sold 42 watches for $21,840 cash.

Aug. 12 Purchased 42 watches for $6,720 ($160 per watch) cash.

Aug. 22 Sold 32 watches for $16,640 on account.

Sep. 19 Paid for watches purchased on July 17.

Sep. 27 Receive cash of $9,984 for watches sold on account on August 22.

Oct. 27 Purchased 85 watches for $14,450 ($170 per watch) cash.

Nov. 20 Sold 92 watches for $47,840 cash.

Dec. 4 Purchased 102 watches for $18,360 ($180 per watch) on account.

Dec. 8 Sold 42 watches for $21,840 on account.

Late in December, the next generation of multiuse (MU II) watches is released. In addition to all of the features of the MU watch, the MU II watches are equipped with a global positioning system (GPS) and have the ability to download and play songs and videos off the Internet. The demand for the original MU watches is greatly reduced. As of December 31, the estimated net realizable value of MU watches is only $100 per watch.

Prepare General Journal, General Ledger, Trial balance, income statement, and balance sheet.

Answer 1

General Journal

Date	Particulars	Debit	Credit
17/07/2022	Purchase A/c Dr.	$7950.00
	To. Account Payable		$7950.00
31/07/2022	Cash A/c Dr.	$21840.00
	To. Sales		$21840.00
12/08/2022	Purchase A/c Dr.	$6720.00
	To. Cash		$6720.00
22/08/2022	Account receivable A/c Dr.	$16640.00
	To. Sales		$16640.00
19/09/2022	Accounts payable A/c Dr.	$7950.00
	To. Cash		$7950.00
27/09/2022	Cash A/c Dr.	$9984.00
	To. Account receivable		$9984.00
27/10/2022	Purchase A/c Dr.	$14450.00
	To. Cash		$14450.00
20/11/2022	Cash A/c Dr.	$47,840.00
	To. Sales		$47,840.00
04/12/2022	Purchase A/c Dr.	$18,360.00
	To. Account Payable		$18,360.00
08/12/2022	Account receivable A/c Dr.	$21,840.00
	To. Sales		$21,840.00

General ledger

Accounts Payable

19/09/22	Cash	7,950.00	17/07/22	Purchase	7,950.00
31/12/22	Balance b/d	18,360.00	04/02/22	Purchase	18,360.00
		26,310.00			26,310.00

Accounts receivable

22/08/22	Sales	16,640.00	27/09/22	Cash	9,984.00
08/12/22	Sales	21,840.00	318/12/22	Balance b/d	28,496.00
		38,480.00			38,480.00

Cash

31/07/22	Sale	21,840.00	12/08/22	Purchase	3,720.00
27/09/22	Account receivables	9,984.00	19/09/22	Accounts Payable	7,950.00
20/11/22	Sales	47,840.00	27/10/22	Purchase	14,450.00
			31/12/22	Balance b/d	50,544.00
		76,664.00			76,664.00

Trial balance

Particulars	Debit	Credit
Purchase	47,480.00
Sales		1,08,160.00
Account Receivable	28,496.00
Account Payable		18,360.00
Cash	50,544.00
	1,94,600.00	1,94,600.00

Note:

1.closing stock is valued at cost or net realizable value whichever is lower.(74*100)

Income Statement

	Amount in $		Amount in $
Purchase	47,480.00	Sales	1,08,160.00
Profit	68,080.00	Closing stock	7,400.00
	1,15,560.00		1,15,560.00

Balancesheet

Liabilities	Amount in $	Asset	Amount in $
Account Payables	18,360.00	Account receivables	28,496.00
Profit	68,080.00	Cash	50,544.00
		Closing Stock	7,400.00
	86,440.00		86,440.00