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Prepare gross profit section of a partial income statement

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Question: 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 2019. All watches are sold for $306 each.

Jul. 17 Purchased 56 watches for $8,736 ($156 per watch) on account

Jul. 31 Sold 46 watches for $14,076 cash.

Aug. 12 Purchased 46 watches for $7,636 ($166 per watch) cash.

Aug. 22 Sold 36 watches for $11,016 on account.

Sep. 19 Paid for watches ordered on July 17.

Sep. 27 Received full payment for watches sold on account on August 22.

Oct. 27 Purchased 86 watches for $15,136 ($176 per watch) cash.

Nov. 20 Sold 96 watches for $29,376 cash.

Dec. 4 Purchased 112 watches for $20,832 ($186 per watch) cash.

Dec. 8 Sold 46 watches for $14,076 on account.

Required: 1-a. Calculate sales revenue, cost of goods sold, and ending inventory as of December 31, 2019, assuming Suzie uses FIFO to account for inventory.

1-b. Prepare the gross profit section of a partial income statement for transactions related to MU watches.

Reference no: EM131749204

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