Module 9 Assignment 1 and 2 : Whitewater Co. and PF Johnson -- w/ Solutions!!!

Module 9 Assignment 1:

Whitewater Co. lost its entire inventory in a flash flood that occurred on August 31, 20##. 

Over the past 4 years gross profit has averaged 32% of net sales. The following records for August were recovered:

Beginning Inventory

$38,600

Net Purchases

$341,900

Sales

$530,400

Sales returns and allownaces

$12,300

Sales discounts

$6,500

Requirements:

1

Estimate the August 31 inventory using the gross profit method.

2

Prepare the August income statement through gross profit for Whitewater Co.

Module 9 Assignment 2:

P.F. Johnson has the following information for the years ending December 31, 2009 and 2010.

2010

2009

Sales Revenue

$242

$239

Cost of Goods Sold:

     Beginning Inventory

$22

$38

     Net Purchases

152

144

     Goods Available for Sale

$174

$182

     Ending Inventory

13

22

     Cost of Goods Sold

161

160

Gross Profit

$81

$79

Operating Expenses

55

54

Net Income

$26

$25

Requirements:

1

Compute the inventory turnover rate for P.F. Johnson for 2009 and 2010. Round to two decimal places.

2

What is the likely cause of the change in turnover rate from 2009 to 2010?