Reference no: EM133138050
Question - Sportify is a merchandising company that resells sportswear and athletic gear. One of the merchandising items are volleyballs. Sportify maintains separate asset/revenue/cost of goods sold accounts by products.
It is now October 31, 2021 and the following information relates to volleyball inventory. Sportify uses the weighted average costing method.
As at September 30, 2021, Sportify had 10 volleyballs as part of their inventory and the weighted average cost was $14.00 per ball.
On October 4, Sportify created a purchase order to buy 40 volleyballs from Volley Wood at a cost of $13.50 per ball. Sportify will pay $45 for shipping on this order.
FOB shipping point shipping terms apply to this order.
The volleyballs were shipped on October 5 and delivered to Sportify on October 11. Payment was made on October 21.
Sportify sold 35 volleyballs on October 24 to a coach for $800. The coach walked out of the store with volleyballs and paid Sportify in cash.
Required - Based on the information above, answer the following three questions pertaining to Sportify.
1. What are the journal entry/entries required to record the purchase of 40 volleyballs on October 4th? Ensure you show all your calculations and round to two decimal places if necessary.
2. On which date should Sportify recognize revenue? Support your answer by connecting case facts to each of the revenue recognition criteria.
3. What are the journal entry/entries required to record the sale of 35 volleyballs? Ensure you show all your calculations and round to two decimal places if necessary.