1. Owl Company has the following transactions during March: March 3: Purchases inventory on account for $3,300,...
Question:
1. Owl Company has the following transactions during March: March 3: Purchases inventory on account for $3,300, terms 3/10, n/30. March 5: Pays freight costs of $280 on inventory purchased on March 3. March 6: Returns inventory with a cost of $700. March 12: Pays the full amount due on March 3 purchase. March 29: Sells all inventory purchased on March 3 (less those returned on March 6) for $5,700 on account.
Record all transactions, assuming the company uses a perpetual inventory system.
2. Using the formulas for inventory turnover ratio (COGS/Average Inventory), average days in inventory (365/Inventory Turnover Ratio), and gross profit ratio (Gross Profit/Net Sales), compute answers for the following two problems:
First problem: A company reports the following amounts for 2030: Inventory (beginning) $ 20,000 Inventory (ending) 30,000 Purchases 160,000 Purchase returns 10,000
Compute the following financial calculations for 2030:
- Cost of goods sold
- Inventory turnover ratio
- Average days in inventory
Second problem: A company reports the following amounts at the end of the year: Sales revenue $ 360,000 Cost of goods sold 215,000 Net income 58,000
Compute the company's gross profit ratio.
Financial Accounting
ISBN: 9780078110825
2nd Edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann