ACCO 310 Tutorial Week #7 Question 1 Knowl Inc. is a publicly-traded company that manufactures video games. The company uses the perpetual inventory system and the first-in, first-out (FIFO) cost flow assumption. For each of the independent scenarios below, provide the necessary journal entries so that inventory and net income are correct at the end of the Year 1: (a) One of Knowl's products became obsolete during Year 1. The cost of this inventory is $25,000. The company estimates it could eventually sell the product for $3.000. (b) In the Year 1 inventory count, employees improperly included 1,000 units of finished goods that had already been sold to customers. These units had a cost of $8,000 under FIFO. (c) An invoice of $15,000 of materials received and used in production arrived after the year-end and so, the invoice was not recorded in Year 1. However, the amount of raw materials in ending inventory was correct based on the inventory count. (d) In Year 1, Knowl incurred the following expenditures: Factory labour $1,000,000 Materials used in manufacturing 800.000 Variable overhead 300.000 Subtotal $2,100,000 Transportation cost of raw materials 200.000 Factory depreciation 700,000 Salary of production vice-president 100.000 Salary of marketing vice-president 120.000 Advertising cost for new game 200.000 $3,420,000 The company's accountant debited $2,100,000 to the merchandise inventory account. The remainder was expensed as period costs. TO ' F Required: Provide the necessary journal entries so that inventory and net income are correct at the end of the Year 1