Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2025. All watches are sold for $491 each. July 17 Purchased 41 watches for $5,781 ($141 per watch) on account. July 31 Sold 31 watches for $15,221 cash. August 12 Purchased 31 watches for $4,681 ($151 per watch) cash. August 22 Sold 21 watches for $10,311 on account. September 19 Paid for watches purchased on July 17. September 27 Receive cash of $20,400 for watches sold on account on August 22. October 27 Purchased 71 watches for $11,431 ($161 per watch) cash. November 20 Sold 81 watches for $39,771 cash. December 4 Purchased 102 watches for $17,442 ($171 per watch) on account. December 8 Sold 31 watches for $15,221 on account. Required: 1-a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2025, assuming Suzie uses a FIFO perpetual inventory system to account for inventory. 1-b. Prepare the gross profit section of a partial income statement for transactions related to MU watches.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Now that operations for outdoor clinics and TEAM events are running smoothly, Suzie thinks of another area for business expansion. She notices that a few clinic participants wear multiuse (MU) watches. Beyond the normal timekeeping features of most watches, MU watches are able to report temperature, altitude, and barometric pressure. MU watches are waterproof, so moisture from kayaking, rain, fishing, or even diving up to 100 feet won’t damage them. Suzie decides to have MU watches available for sale at the start of each clinic. The following transactions relate to purchases and sales of watches during the second half of 2025. All watches are sold for $491 each.

July 17	Purchased 41 watches for $5,781 ($141 per watch) on account.
July 31	Sold 31 watches for $15,221 cash.
August 12	Purchased 31 watches for $4,681 ($151 per watch) cash.
August 22	Sold 21 watches for $10,311 on account.
September 19	Paid for watches purchased on July 17.
September 27	Receive cash of $20,400 for watches sold on account on August 22.
October 27	Purchased 71 watches for $11,431 ($161 per watch) cash.
November 20	Sold 81 watches for $39,771 cash.
December 4	Purchased 102 watches for $17,442 ($171 per watch) on account.
December 8	Sold 31 watches for $15,221 on account.

Required:

1-a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2025, assuming Suzie uses a FIFO perpetual inventory system to account for inventory.
1-b. Prepare the gross profit section of a partial income statement for transactions related to MU watches.

Prepare the gross profit section of a partial income statement for transactions related to MU watches.
GREAT ADVENTURES, INCORPORATED
Partial Income Statement
For the Year Ended December 31, 2025
Gross Profit

Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2025, assuming Suzie uses a FIFO
perpetual inventory system to account for inventory.
Sales Revenue
Cost of Goods Sold
Ending Inventory

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