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Required information RWP 6 - 1 ( Algo ) Great Adventures Continuing Case [ The following information applies to the questions displayed below. ] Now
Required information
RWPAlgo Great Adventures Continuing Case
The following information applies to the questions displayed below.
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 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 All watches are sold for $ each.
July Purchased watches for $ $ per watch on account.
July Sold watches for $ cash.
August Purchased watches for $ $ per watch cash.
August Sold watches for $ on account.
September Paid for watches purchased on July
September Receive cash of $ for watches sold on account on August
October Purchased watches for $ $ per watch cash.
November Sold watches for $ cash.
December Purchased watches for $ $ per watch on account.
December Sold watches for $ on account.
RWPAlgo Great Adventures Continuing Case Part
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 the estimated net realizable value of MU
watches is only $ per watch.
a Record any necessary adjusting entry on December related to this information, assuming Suzie uses a FIFO perpetual
inventory system to account for inventory.
b For what amount would MU inventory be reported in the December balance sheet?
c Prepare an updated gross profit section of a partial income statement accounting for this additional information.
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