question archive All Things Auto are retailers who purchase and sell vehicle parts & accessories, including batteries
All Things Auto are retailers who purchase and sell vehicle parts & accessories, including batteries
Subject:AccountingPrice: Bought3
All Things Auto are retailers who purchase and sell vehicle parts & accessories, including batteries. The business uses a perpetual inventory system and began the last quarter of 2020 with merchandise inventory of 10 batteries of the "DieHard" brand at a total cost of $168,200.
The following transactions, relating to the "DieHard" brand were completed during the quarter:
October 5 Purchased 15 batteries at a cost of $17,020 each.
October 14 Sold 18 batteries at $22,250 per battery
October 22 Purchased 24 batteries at a cost of $18,175 each but the supplier gave a 4% quantity discount.
November 10 Sold 15 batteries to Orion Auto Ltd and 10 batteries to Brown's Auto Detailing at a price of $23,990 each.
November 12 Owing to an increased demand for this brand of batteries, 30 batteries were purchased on account at a cost of $17,612 each. In addition, All Things Auto paid $288 in cash on each battery to have the inventory shipped from the vendor's warehouse to their location.
November 27 Sold 23 batteries which yielded total sales revenue of $576,840. (8 of these batteries were sold on account to Middletown Fuel & Auto Accessories a longstanding customer)
November 30 A customer, to whom 5 batteries were sold at the end of the business day on November 27, returned 2 units, as they were of the "Duralast" brand.
December 2 In preparation for the festive season, All Things purchased 25 batteries at a total cost of
$474,500.
December 15 5 of the batteries purchased on December 2 were returned to the supplier, as the poles were either corroded or otherwise badly damaged.
December 30 Sold 22 batteries to two customers (Omega Traders & Middleton Auto Accessories) at a selling price of $26,950 each.
December 31 An actual count of inventory was carried out which revealed that there were 9 units of the "DieHard" brand in the warehouse.
All purchases were on account and received on the dates stated.
Required:
(B) Given that selling, distribution and administrative costs for the quarter were $23,445, $10,250 and$75,435 respectively, do an income statement for All Things Auto (DieHard) for the quarter ended December 31, 2020, to determine the net profit for the quarter.
