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In: Accounting

Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another...

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.

Solutions

Expert Solution

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

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Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another...
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...
Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another...
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