Accounting: Module 9 Assignment (Part 1 - Whitewater Co and Part 2 - P.F. Johnson)

Accounting
Module 9
Assignment 1:

Whitewater Co. lost its entire inventory in a flash flood that occurred on August 31, 20##. Over the past 4 years gross profit has averaged 32% of net sales. The following records for August were recovered: Beginning Inventory $38,600 Net Purchases $341,900 Sales $530,400 Sales returns and allowances $12,300 Sales discounts $6,500

Requirements:
1. Estimate the August 31 inventory using the gross profit method.
2. Prepare the August income statement through gross profit for Whitewater Co.

Module 9
Part 2:

P.F. Johnson has the following information for the years ending December 31, 2009 and 2010. 2010 2009 Sales Revenue $242 $239 Cost of Goods Sold: Beginning Inventory $22 $38 Net Purchases 152 144 Goods Available for Sale $174 $182 Ending Inventory 13 22 Cost of Goods Sold 161 160 Gross Profit $81 $79 Operating Expenses 55 54 Net Income $26 $25

Requirements:
1. Compute the inventory turnover rate for P.F. Johnson for 2009 and 2010. Round to two decimal places. Show your work.
2. What is the likely cause of the change in turnover rate from 2009 to 2010?
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