Answer:
Cost of goods sold is $7,700
Gross Profit is $2,300
Explanation:
Cost of goods sold is Cost of goods available for sale less ending merchandise inventory. Ending merchandise understated by $300 means ending merchandise was accounted $300 less. So, $300 need to be added to ending merchandise. No ending merchandise is $2,300 (2,000 + 300)
Cost of goods sold will be 10,000 - 2,300 = $7,700
Gross profit is sales revenue less cost of goods sold which is computed as shown below:
Gross profit = 10,000 - 7,700
= $2,300
Answer:
B
Explanation:
Had the same question and it was the correct answer
Answer:
The management can make Elena a loyalty card holder or loyalty program member.
Explanation:
A customer loyalty program refers to a kind of reward program offered by a company to it's those customers who frequently purchase it's products or avail it's services.
Usually, under such loyalty programs, a customer is provided with a loyalty card, wherein for each purchases he/she makes, some loyalty points are earned. These loyalty points can collectively be redeemed later on, in the form of discounts.
So, in the current case, since elena is a frequent buyer of coffee on routine basis, the management can include her in their customer loyalty program and provide her with a loyalty card.
Such card will provide her with rewards and would make her feel privileged, strengthen her bond of loyalty with cuppo' coffee and may lead to increased customer share.
Answer:
Entry to record adjustment:
COGS Dr $9.4m
Inventory Cr $9.4m
Explanation:
The question relates to a change in accounting policy. According to IAS 8 (changes in accounting policy and estimate), a change in accounting policy is to be reflected retrospectively and prospectively, which means any changes should be implemented by bringing changes in the past records. Since CPS company has been using FIFO method, the inventory has been overstated in the financial statements. A shift to AVCO has resulted in a decrease in inventory value.
The value of inventory has to be reduced as a result of change in accounting policy (i.e $38m - $28.6m). This is the closing inventory so a reduction in the value of closing inventory results in an increase in cost of goods sold (COGS), therefore, the adjusting entry will be aimed at reducing inventory and increasing cost of goods sold, see as follows:
Entry:
COGS Dr $9.4m
Inventory Cr $9.4m
