Prepare summary journal entries for period purchases

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Gould's Company, which furnishes a single product, use the perpetual inventory method. At the end of each accounting period, a physical inventory is taken to verify the perpetual inventory records. For its most recent accounting period, Gould's records showed beginning inventory of 673 units; goods added to finished goods inventory during the period, 5,700 units; and sales during the period of 5,800 units. Finally, during the period, 80 units in resalable condition were returned by Gould's customers. The unit cost was $15 throughout the period.

a. Assuming Gould's sells this item for $23 per unit, prepare summary journal entries for the period's purchases, sales, and sales returns.

b. Prepare an income statement down to the gross margin line.

c. Assume that after the entries in part (a) wer made, a physical count revealed that ending inventory was actually 610 units. What additional entry is required? How does this affect your income statement?

Reference no: EM13145583

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