I need help to journalize these transactions for accounting. Samantha purchased inventory costing 125,000 and sold 70% of the goods for 162,500 all purchases and sales were on account She later collected 25% of the accounts receivable
Which is the perpetual inventory system inventory, revenues and expenses on financial statements, report gross profits on the appropriate statement.
This is a business problem. Please say that in your subject line so we Physics and History teachers do not waste time.
closing inventory (under perpetual system): 125,000 x 30% = $37,500 (Income statement and bal sheet)
Sales Revenue : $162,500 (Income Statement)
Cost of goods sold (expense):
125,000 x 70% = $87,500 (Income Statement)
Gross profit: 162,500 - 87,500= $75,000 (Income statement)
A/c Payable: $125,000 (Bal Sheet)
A/c receivable: 162,500 x 75%= $121,875 (bal Sheet)
To journalize the transactions for accounting, you need to follow these steps:
1. Identify the accounts involved in each transaction. For this scenario, we have the following accounts:
- Inventory (asset account)
- Accounts Payable (liability account)
- Revenue/Sales (income account)
- Accounts Receivable (asset account)
- Cash (asset account)
2. Analyze the transactions to determine the impact on the accounts involved.
Now, let's break down the transactions and journalize them:
1. Samantha purchased inventory costing $125,000 on account. This transaction impacts the Inventory and Accounts Payable accounts.
Journal Entry:
Accounts Payable $125,000
Inventory $125,000
2. Samantha sold 70% of the goods for $162,500. This transaction impacts the Revenue/Sales, Accounts Receivable, and Cost of Goods Sold (COGS) accounts. As per the perpetual inventory system, we record the COGS separately.
Journal Entry:
Accounts Receivable $162,500
Revenue/Sales $162,500
3. Samantha collected 25% of the accounts receivable. This transaction impacts the Accounts Receivable and Cash accounts.
Journal Entry:
Cash $40,625 (25% of $162,500)
Accounts Receivable $40,625
Additionally, since the perpetual inventory system is being used, we need to report the inventory, revenues, and expenses on the financial statements differently:
- Inventory: The inventory cost of $125,000 should be reported on the balance sheet as an asset.
- Revenues: The revenue from the sale of $162,500 should be reported on the income statement as part of the net sales figure.
- Expenses: The Cost of Goods Sold (COGS), which represents the cost of the goods sold, should be reported on the income statement as a deduction from the net sales to calculate the gross profit.
Remember, if you need to prepare financial statements, you must consider all the relevant accounts and their impact to present an accurate and comprehensive view of the company's financial position and performance.