4SE_2 Question:聽Boston Cycles started... [FREE SOLUTION]

Chapter 6: 4SE_2 (page 358)

Question:Boston Cycles started October with 12 bicycles that cost $42 each. On October 16, Boston bought 40 bicycles at $68 each. On October 31, Boston sold 34 bicycles for$100 each.
Preparing a perpetual inventory record and journal entries鈥擣IFO
Requirements
2. Journalize the October 16 purchase of merchandise inventory on the account and theOctober 31 sale of merchandise inventory on the account.

Expert verified

The revenue generated through sales amounts to$3,400 and the gross profit earned is $1,400.

Date	Description	Debit	Credit

Oct 16	Merchandise Inventory (bicycles)	$2,720
	Accounts Payable		$2,720
	Being inventories purchased on credit

Date	Description	Debit	Credit

Oct 31	Accounts Receivables	$3,400
	Sales Revenue		$3,400
	Being inventories purchased on credit

Oct 31	Cost of goods sold	$2,000
	Merchandise inventory (bicycles)		$2,000
	Being goods sold valued based on FIFO

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	2019	2018	2017
Net Sales Revenue	\( 220,000	\) 162,000	\( 176,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\)22,000	\(29,000	\)46,000
Net cost of purchase	132,000	90,000	76,000
Cost of goods available for sale	154,000	119,000	122,000
Less: Ending Merchandise Inventory	32,000	22,000	29,000
Cost of goods sold	122,000	97,000	93,000
Gross Profit	98,000	65,000	83,000
Operating Expenses	72,000	38,000	48,000
Net Income	\( 26,000	\) 27,000	$ 35,000