PROBLEM: Inventory and Sales

Question

GHI had the following information on their Income Statement 2011

Sales
2,560,000

Sales return
25,000

Purchases
1,650,000

Purchase return and allowances
14,000

Freight- in
15,000

Raw materials, beg
240,000

Raw materials, end
110,000

Work-in-process inventory, beg
114,000

Work-in-process inventory, end
124,000

Finished goods, beg 213,000

Finished goods, end ?

Factory overhead 296,000

Administrative expenses 145,000

Selling expenses 174,000

Distributing expenses 133,000

Net Income ?

Answer 1

Set up T-account for each inventory item given and input the beginning and ending balances of inventory. Then start recording the sales, purchases, sales returns, and purchase returns in journal entry form and post the entries. Soon the inventory accounts will tell you what you need to input to make the account balance properly. For example, Raw materials started at 240,000 you purchased 1,650,000 returned 14,000 and ended up with 110,000. So to get the ending balance of 110,000 you have to credit raw materials and debit work in process, and there is only one amount of credit that will work. The T-account tells you how much you need to credit to get the ending balance.  Continue this way with other inventories. .

 

Do as much as you can, show your work here, and you can get help finishing the problem if you have any trouble. Or look me up under tutors and we can continue working on this problem and others.