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  • Case 1 Case 2: To Correct Repo Entry To Correct Repo Entry

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    Juvy Dimaano
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    Case 1 details purchases of $500,000 on January 1st. On February 28th there was an inventory adjustment of $700,000. On December 31st cost of sales was $420,000 and gross profit was $280,000, yielding a gross profit rate of 40%. Case 2 is similar to Case 1 but also includes a $100,000 merchandise repo on June 30th with a $23,429 loss on the repo. On December 31st the entries were corrected, showing a $3,429 loss on the repo instead of $23,429.

    Original Description:

    118

    Original Title

    118.2 – Issues – Installment Sales

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    Case 1 details purchases of $500,000 on January 1st. On February 28th there was an inventory adjustment of $700,000. On December 31st cost of sales was $420,000 and gross profit was $280,000, yielding a gross profit rate of 40%. Case 2 is similar to Case 1 but also includes a $100,000 merchandise repo on June 30th with a $23,429 loss on the repo. On December 31st the entries were corrected, showing a $3,429 loss on the repo instead of $23,429.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    2 views2 pages

    Case 1 Case 2: To Correct Repo Entry To Correct Repo Entry

    Uploaded by

    Juvy Dimaano
    Case 1 details purchases of $500,000 on January 1st. On February 28th there was an inventory adjustment of $700,000. On December 31st cost of sales was $420,000 and gross profit was $280,000, yielding a gross profit rate of 40%. Case 2 is similar to Case 1 but also includes a $100,000 merchandise repo on June 30th with a $23,429 loss on the repo. On December 31st the entries were corrected, showing a $3,429 loss on the repo instead of $23,429.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 2

    Case 1

    Jan 1
    Purchases

    500,000
    Cash

    Feb 28
    IAR

    Case 2
    Jan 1
    [Same]
    500,000

    700,000
    Inst sales

    May 15
    Cash

    Feb 28
    [Same]
    700,000

    100,000
    IAR

    Jun 30
    Repo - merch
    Loss on repo

    [Same]
    100,000

    100,000
    100,000
    IAR

    200,000

    Jun 30
    Repo - merch
    DGP
    Loss on repo

    100,000
    76,571
    23,429
    IAR

    Dec 31
    COS
    Invty, end

    700,000
    100,000
    Invty, beg
    Purchases
    Repo-merch

    Inst sales

    Dec 31
    [Same]
    200,000
    500,000
    100,000

    700,000
    COS
    DGP

    GP rate

    [Same]
    420,000
    280,000

    40%

    DGP

    40,000
    RGP

    To correct repo entry


    DGP
    80,000
    Loss on repo

    [Same]
    40,000

    80,000

    To correct repo entry


    DGP
    3,429
    Loss on repo

    Inst sale as % of total sales

    200,000

    3,429

    60%

    COS estimate:
    Invty, beg
    Purchases
    Repo - merch
    Invty, end (June 30, 2014)
    COS

    200,000
    500,000
    100,000
    80,000
    720,000

    COS estimate to inst sales


    GP rate estimate

    432,000
    38%

    Should be DGP related to repo


    80,000

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