Question
SHOW calculations to work*** Kramer Corp. reported the following sale and purchase transactions related to a specific product in January 2017: Date Transaction Quantity Unit
SHOW calculations to work***
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. 1 |
| Beginning inventory |
| 5 units |
| $90 |
|
|
Jan. 3 |
| Sale on account |
| 3 units |
|
|
| $120 |
Jan. 6 |
| Purchase on account |
| 11 units |
| 95 |
|
|
Jan. 8 |
| Sale on account |
| 4 units |
|
|
| 120 |
Jan. 9 |
| Sale on account |
| 5 units |
|
|
| 120 |
Jan. 15 |
| 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.
-
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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