Refer to the facts in Problem 6-29. Data from 6-29. Assume that GFF uses a perpetual inventory
Question:
Data from 6-29.
Assume that GFF uses a perpetual inventory system and the weighted-average cost flow assumption to account for its inventory. All purchases were made on account; all sales were for cash. GFF€™s supplier offered terms of 2/10, net 30. GFF recorded purchases at the gross amount. Additional information follows:
Purchase discount taken
Purchase #1 ..................................................... Yes
Purchase #2 ...................................................... No
Purchase #3 ...................................................... No
Sales price per unit
Sale #1 ....................................................... $24.00
Sale #2 ........................................................ 26.00
Sale #3 ........................................................ 25.50
Required:
a. Prepare journal entries to record:
i. The purchases of the inventory
ii. The sales of the inventory
iii. Payment of the accounts payables
b. Assume that GFF€™s opening and closing balances of its accounts receivable and payable for the year were $0. If the company uses the direct method to prepare its statement of cash flows, how much would be reported as a cash inflow from the sale of inventory? As a cash outflow from the purchase of inventory?
Accounts ReceivableAccounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Step by Step Answer:
a ai To record the purchase of the inventory P1 Dr Inventory 87500 Cr Accounts payable 87500 P2 D...View the full answer
