Jim has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios. During its first month of activity, the company has made the following trancactions: February 2: Purchase of Pistachios: Purchase of Aimonds: 2.500K105S $ 25.000 4.000KSSAKE 5 20.000 Purchas of Peanuts: $18.000 February 3 Purchase of Pistachios 1500K125k S18.000 Purchase of Almonds: $ 12.000 Purchas of Peanuts: 2000 ASks S8.000 February 6: Sold to several clients: Pistachios: 2.000Ke 20S/Kg $40.000 Almonds: 2 SOOKEO 11S/kg $ 27.500 Peanuts: 3.000KE 75/ Kg $21.000 February 6: Sold to Fruits Lovers Inc.: Pistachlos: SOOK20S/K $ 10.000 Almonds: 1.000Kg 115/Kg $11.000 Peanuts: $ 12.000 February 12 Purchase of Pistachios: $ 21.000 Purchase of almonds: 2.000KO BS/K $ 16.000 February 13 Sale of peanuts to Peanuts Lovers Inc: 350058. 8S/ $ 28.000 February 14: Purchase of Peanuts 6.000 KALASIKE $24.000 February 19: Sold to several dlients Pistachios $21.000 Almonds $ 19 500 Peanuts: $27.000 February 25: Purchased from various suppliers Pistachios S 13.000 Almonds: 1.000KO 95/Kg $9.000 1.000Kg 45/ KR, $4.000 Peanuts: Besides these transactions, the company has had the following expenses: Salaries: $3500 Electricity bill: $300 Renting of equipment: S800 Rent of warehouse and office: $1.500 Miscellaneous: S1.200 Jim's accountant recommended that he should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the consequences it may have on his financial situation. Relying on your accounting knowledge, Jim asks you the following questions: 1: Why in your opinion did Jim's accountant recommend the average cost method and what difference is there with the three other methods? Explain the main characteristics of each method of valuation of the inventory and the consequences they may have on the valuation of the inventory and determination of the net income in case of price fluctuation. (20 points) 2: Prepare an Income statement of the company at the end of February using as method of valuation of the inventory the average cost method, FiIFO and LIFO for each one of the products sald by lim, and calculate the balance of the inventory at the end of the month. Explain the calculations. (40 points: 30 points for the calculation and 1o for explanations) 3 in order to compare with the records made by his accountant, lim asks you to prepare the different journal entries for the purchases and sales mentioned above for each one of the 3 different methods used above. (15 paints 4: lim's accountant insisted that he should use a perpetual inventory system instead of a periodic inventory system and the average cost method for valuating the inventory Do you agree with this advice (justify your answer)? Would the balance of the inventory at the end of the manth be the same? And the net income? (15 points S im would like to know a forecast of the number of days to sell the inventory based on the results of the month of February. Explain your calculation and the steps followed. (20 paints:5 for calcutaticn and Sfor explatiation 6. Jim expects that the prices of the merchandises will dramatically decrease in the next future as a result of the Covid 19 crisis. Which method of valuation of the Inventory would you thus recommend to Jim? Explain your answer. (5 points) Rubrics Descriptor The student demonstrates an excellent understanding of the 9-10 concepts. 8-8.9 7-79 6-6.9 The student demonstrates a good understandting of the concepts The student demonstrates a fair understanding of the concepts The student demonstrates some, but insufficient understanding of the concepts. The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student The student demonstrates insuffioent understanding of the concepts and does not mention any relevant ideas or concepts The student leaves the question blank or cheats 35.9 1-29 95% of the grade based on the approach, calculations and comments, and 5% based on the presentation and look & feld of the spreadsheet Points are at the end of each question,