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katherineweightman
09.08.2021 •
Advanced Placement (AP)
Question 3
a) On March 1st, Valentina had six paddleboards ($500 cost). Each Monday this month (March 7th,
14th, 21st, and 28th), Valentina purchased six paddleboards from her supplier. The price increased to
$510 on March 12th, but dropped to $505 on March 28th. Valentina sold one paddleboard in week one
(March 1st to 7th), eight in week two, six in week three, and five in week four. Assuming the selling price
was $800 per paddleboard and Valentina uses the moving-weighted-average method, what was her
gross margin for March? Make all necessary journal entries and SHOW YOUR WORK!
b) Repeat 3a, but using the first-in-first-out method.
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Ответ:
a) The gross margin for March, using the moving-weighted-average method is $5,907.
Journal Entries:
March 7th
Debit Inventory $3,000
Credit Cash $3,000
Debit Cost of Goods Sold $500
Credit Inventory $500
Debit Cash $800
Credit Sales Revenue $800
March 14th
Debit Inventory $3,060
Credit Cash $3,060
Debit Cost of Goods Sold $4,032
Credit Inventory $4,032
Debit Cash $6,400
Credit Sales Revenue $6,400
March 21st
Debit Inventory $3,060
Credit Cash $3.060
Debit Cost of Goods Sold $3,036
Credit Inventory $3,036
Debit Cash $4,800
Credit Sales Revenue $4,800
March 28th
Debit Inventory $3,030
Credit Cash $3,030
Debit Cost of Goods Sold $2,525
Credit Inventory $2,525
Debit Cash $4,000
Credit Sales Revenue $4,000
b) The gross margin for March, using the first-in-first-out method is $5,920.
Journal Entries:
March 7th
Debit Inventory $3,000
Credit Cash $3,000
Debit Cost of Goods Sold $500
Credit Inventory $500
Debit Cash $800
Credit Sales Revenue $800
March 14th
Debit Inventory $3,060
Credit Cash $3,060
Debit Cost of Goods Sold $4,000
Credit Inventory $4,000
Debit Cash $6,400
Credit Sales Revenue $6,400
March 21st
Debit Inventory $3,060
Credit Cash $3,060
Debit Cost of Goods Sold $3,030
Credit Inventory $3,030
Debit Cash $4,800
Credit Sales Revenue $4,800
March 28th
Debit Inventory $3,030
Credit Cash $3,030
Debit Cost of Goods Sold $2,530
Credit Inventory $2,530
Debit Cash $4,000
Credit Sales Revenue $4,000
Workings:
Cost of Goods Sold based on Moving Weighted-Average Method
Date Description Qty Unit Cost Total Cost Ending Balance
March 1st Beginning inventory 6 $500 $3,000 $3,000
March 7th Purchases 6 $500 $3,000 $6,000 ($3,000 + $3,000)
Week 1 Cost of Sales -1 $500 $500 $5,500 ($6,000 - $500)
March 14th Purchases 6 $510 $3,060 $8,560 ($5,500 + $3,060)
Week 2 Cost of Sales -8 $504 $4,032 $4,528 ($8,560 - $4,032)
March 21st Purchases 6 $510 $3,060 $7,588 ($4,528 + $3,060)
Week 3 Cost of Sales -6 $506 $3,036 $4,552 ($7,588 - $3,036)
March 28th Purchases 6 $505 $3,030 $7,582 ($4,552 + $3,030)
Week 4 Cost of Sales -5 $505 $2,525 $5,057 ($7,82 - $2,525)
Sales revenue = 20 x $800 = $16,000
Cost of goods sold = Cost of goods available – Ending inventory
= $10,093 ($15,150 - $5,057)
Gross margin for March = $5,907 ($16,000 - $10,093)
FIFO Method:
Date Description Qty Unit Cost Total Cost Ending Balance
March 1st Beginning inventory 6 $500 $3,000 $3,000
March 7th Purchases 6 $500 $3,000 $6, 000 ($3,000 + $3,000)
Week 1 Cost of Sales -1 $500 $500 $5,500 ($6,000 - $500)
March 14th Purchases 6 $510 $3,060 $8,560 ($5,500 + $3,060)
Week 2 Cost of Sales -8 $500 $4,000 $4,560 ($8,560 - $4,000)
March 21st Purchases 6 $510 $3,060 $7,620 ($4,560 + $3,060)
Week 3 Cost of Sales -6 $3,030 $4,590 ($7,620 - $3,030)
March 28th Purchases 6 $505 $3,030 $7,620 ($4,590 + $3,030)
Week Four Cost Sales -5 $510 $2,550 $5,070 ($7,620 - $2,550)
Sales revenue = 20 x $800 = $16,000
Cost of goods sold = Cost of goods available – Ending inventory
= $10,080 ($15,150 - $5,070)
Gross margin for March = $5,920 ($16,000 - $10,080)
Thus, Velentina's gross margin or profit is the difference between its sales revenue and the cost of goods sold.
Learn more about gross margin
Ответ:
what are we gonna do in there hmMMmM?
Explanation: