91Ó°ÊÓ

Question:This problem continues the Canyon Canoe Company situation from Chapter 5. At the beginning of the January 2019, Canyon Canoe Company decided to carry and sellT-shirts with its logo printed on them. Canyon Canoe Company uses the perpetualinventory system to account for the inventory. During February 2019, Canyon CanoeCompany completed the following merchandising transactions:

Feb. 2 Sold 60 T-shirts at \(10 each.

5 Purchased 50 T-shirts at \)6 each.

7 Sold 45 T-shirts for \(10 each.

8 Sold 20 T-shirts for \)10 each.

10 Canyon Canoe Company realized the inventory was running

low, so it placed a rush order and purchased 20 T-shirts. The

premium cost for these shirts was \(7 each.

12 Placed a second rush order and purchased 40 T-shirts at \)7

each.

13 Sold 20 T-shirts for \(10 each.

15 Purchased 50 T-shirts for \)6 each.

20 In order to avoid future rush orders, purchased 150 T-shirts.

Due to the volume of the order, Canyon Canoe Company

was able to negotiate a cost of \(5 each.

21 Sold 40 T-shirts for \)10 each.

22 Sold 35 T-shirts for \(10 each.

24 Sold 20 T-shirts for \)10 each.

25 Sold 45 T-shirts for \(10 each.

27 Sold 40 T-shirts for \)10 each.

Requirements

2. Provide a summary for the month, in both units and dollars, of the change in inventory in the following format:

	Number of T-shirts	Dollar Amount
Beginning Balance
Add: Purchases
Less: Cost of goods sold
Ending Balance

Step by step solution

01

 Step1: Cost of goods sold

The cost of goods sold is the direct material cost borne by the company to produce the final product. Cost of goods sold includes all costs relating to material purchase like product cost, the carriage in, installation cost, etc.

02

Summary table

Based on the perpetual inventory table prepared in the previous subpart, the summary table for opening stock, COGS, and Ending inventory would be as follow –

	Number of T-shirts	Dollar Amount
Beginning Balance	94	$ 470
Add: Purchases	310	$1,770
Less: Cost of goods sold	325	$1,845
Ending Balance	79	$395

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