Abedie ADE ABCDE ABCede Normal Body Text ListParagraph Albeadte AaBbc Table Heading No Sorcing Price per kg Amount 3 000 $11 4 500 $6 $33 000 $27000 $26 000 6 500 $4 2000 $13 2 500 3000 $7 $5 $26 000 $17500 $15 000 February 1: Purchase of stock Purchase of Pistachios Purchase of Almonds: Purchase of Peanuts: February 2: Purchase of stock Purchase of Pistachios Purchase of Almonds Purchase of Peanuts: February 4: Sold to several clients Sale of Pistachios: I Sale of Almonds: Sale of Peanuts Superscript February 5: Sold to Fruits Lovers Inc. Sale of Pistachios: Sale of Almonds: Sale of Peanuts: February 11: Purchase of stock Purchase of Pistachios Purchase of almonds: 2 500 $21 3000 $12 $52 500 $36 000 $28000 3 500 $8 1000 1500 $21 $12 59 $21000 $18000 $18 000 2000 2000 2500 $15 $9 $30 000 $22 500 February 12: Sale to Peanuts Lovers inc. Sale of Peanuts: 4000 $9 $35 000 6 500 $5 $32 500 February 13: Purchase of stock Purchase of Peanuts February 18: Sold to several clients Sale of Pistachios: Sale of Almonds: Sale of Peanuts: 1500 2 000 3 500 $22 $14 $10 $33000 $28 000 $35 000 February 24: Purchased from various suppliers $14 $10 $21000 $15 000 $ 7500 $5 Purchase of Pistachios: 1500 Purchase of Almonds: 1500 Purchase of Peanuts: 1 500 I Over and above these transactions. The company has had the following expenses: Superscript Salaries Electricity bill Rental expense: Equipment Rental expense: Warehouse and office Miscellaneous expenditure Rental income: Subletting of office space to Fruity Loops Inc. $5 650 $560 $1 150 $1550 $1050 $2 500 QUESTION 1 a. Why in your opinion did Julia's accountant recommend the average cost method? b. Name and explain the main characteristics of the 3 methods of valuation of the inventory. c. Explain the consequences each valuation method may have on the valuation of the inventory in the above scenario and the determination of the net income in case of price fluctuation QUESTION 2 Superscript Prepare an Income statement of the company at the end of February for each one of the products sold by Julia using the following methods of valuation of the inventory: You can ignore all tax consequences. a. The average cost method b.FIFO method and Calculate the balances of the inventory at the end of the month for each valuation method and provide explanations of the calculations, QUESTION 3 In order to compare with the records made by her accountant, Julia asks you to prepare the journal entries for all the purchases and sales of the products using the FIFO method valuation
