Question
Kramer Corp. reported the following sale and purchase transactions related to a specific product in January 2017: Date Transaction Quantity Unit Cost Unit Sales Price
Kramer Corp. reported the following sale and purchase transactions related to a specific product in January 2017:
Date Transaction Quantity Unit Cost Unit Sales Price
Jan 01 Beginning inventory 5 $90
Jan 03 Sale on account 3 $120
Jan 06 Purchase on account 11 $95
Jan 08 Sale on account 4 $120
Jan 09 Sale on account 5 $120
Jan 15 Sale on account Sales returned due to damage, $240 (two units that were sold on January 9). The units were in very poor condition and were destroyed.
Kramer Corp. uses a perpetual inventory system and the FIFO inventory costing method.
Required:
- Compute net sales and gross profit for January 2017
- Determine the inventory turnover ratio and the average days to sell inventory for January 2017, and explain what the numbers mean
- Prepare the Journal Entries to record the purchase transaction on January 6, the sale transaction on January 8, and the sales return on January 15
- 4. Compute the cost of sales for January 2017, assuming for this part only that Kramer uses the weighted-average cost method.
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