Genuine Accessories Inc is a wholesaler of automobile and

truck
Genuine Accessories Inc. is a wholesaler of automobile and truck accessories. Genuine
Accessories began operations in November of the current year and engaged in the following
transactions during November and December of this year. Genuine Accessories uses a
perpetual inventory system.Nov. 3 Purchased $400,000 of automotive accessories, terms
n/30.Nov. 15 Sold $300,000 of automotive accessories, terms n/60. The cost of the accessories
sold is $200,000.Nov. 28 Purchased $600,000 of automotive accessories, terms n/45.Dec. 3
Settled the $400,000 purchase of November 3.Dec. 15 Sold $750,000 of automotive
accessories, terms n/60. The cost of the accessories sold is $500,000.Dec. 27 Purchased
$900,000 of automotive accessories, terms n/30.Instructionsa. Compute the gross profit on
Genuine Accessories’s transactions during November and December.b. Compute the gross
profit on Genuine Accessories’s transactions during November and December if a cash-basis
accounting system was used.c. Explain the difference between the results in a and b.d. Assume
that the fair value of Genuine Accessories’s inventory at December 31 is $1,500,000.A
potential lender asks Genuine Accessories to prepare a fair-value–based balance sheet.
Prepare the journal entry to reflect inventory at fair value. Comment on how a wholesaler might
determine fair value for inventory items. View Solution:
Genuine Accessories Inc is a wholesaler of automobile and truck
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