Answer:
1.
A. Dr Inventory 180,000
Cr Accounts Payable 180,000
B. Dr Accounts Receivable 235,000
Cr Sales Revenue 235,000
C. Dr Cost of Goods Sold 135,000
Cr Inventory 135,000
D. Dr Cash 70,500
Cr Accounts Receivable 70,500
2. BALANCE SHEET $45,000
INCOME STATEMENT $100,000
Explanation:
1. Preparation of the journal entry
A. Preparation of the journal entry for the purchase of inventory.
Dr Inventory 180,000
Cr Accounts Payable 180,000
(Being to record the purchase of inventory)
B. Preparation of the journal entry for sale
Dr Accounts Receivable 235,000
Cr Sales Revenue 235,000
(Being to record sale revenue)
C. Preparation of the journal entry to
Record the cost of goods sold portion of the sale.
Dr Cost of Goods Sold 135,000
Cr Inventory 135,000
(75%*180,000)
(Being to record cost of goods sold portion of the sale)
D. Preparation of the journal entry to Record the collection of 30% of the accounts receivable.
Dr Cash 70,500
Cr Accounts Receivable 70,500
(30%*235,000)
(Being to record the collection of 30% of the accounts receivable)
2. Calculation to Determine what the company will report on the balance sheet
BALANCE SHEET
Current Assets:
Inventory $45,000
(180,000-135,000)
Therefore the company will report $45,000 on the balance sheet
Calculation to Determine what the company will report on the income statement:
INCOME STATEMENT
Sales revenue 235,000
Less Cost of Goods Sold 135,000
Gross profit $100,000
Therefore the company will report $100,000 on the income statement
