BUSINESS CASE (100 points) podia has recently opened a dry fruits wholesale company descared to the sale of peanuti, almonds and pistachiot. The company's name in The Nuthouse The Nuthouse was founded during 2020 Alia's passion, longevity and wealth of knowledge in the industry led to The Nuthouse expanding, Creating a network of partners that spans farming operations in the key growing territories of South Africa THE NUTHOUSE Australia, Kenya, Malawi, Zimbabwe, Mocambique and track Sin 2010 The processing factories surpass global food safety standards and are equipped with state of the art technology During February, its first month of activity. The Nuthouse made the following transaction Price perkt Amon February 1: Purchase of stock Purchase of Pistachios 3 000 $11 533 000 Purchase of Almonds 4500 56 S27 000 Purchase of Peanuts 6500 $26.000 February 2Purchase of stock Purchase of Pistachios 2000 S1 526000 Purchase of Almond 2.500 $7 $17500 Purchas of Peanuts 2500 $5 $1200 February 4: Sold to several clients Sale of Pistachios $21 552500 Sale of Almonds: $32 536 000 Sale of Peanuts 3500 $ S28 000 February 5. Sold to Fruits Loversine Sale of Pistachios 1000 $21 $21000 Sale of Almond 1500 S12 $18000 Sale of Peanuts 2000 513 000 2.500 3000 $15 2000 2.500 S30 000 522500 4000 SM6000 6500 512 500 February 11: Purchase of stock Purchase of Prachios Purchase of almond February 12. Sale to Peanuts Lovers inc. Sale of Peanuts February 13 Purchase of stock Purchase of Peanuts February 18Sold to several dients Sale of Pistachios Sale of Almond Sale of Peanuts February 24 Purchased from various suppliers Sale of Pistachior Sale of Almond Sale of Peanuts 1 500 2000 3500 522 $14 $10 S3000 525000 535 000 1500 1500 1 500 $14 $10 $5 71000 $15 000 $7500 Over and above these transaction, the company has had the following expenses Salaries 55650 Electricity bal 5560 Rental expense: Equipment $1 150 Rental expense: Ware and office 51 550 Miscellaneous expenditure $1050 Rental come Sublettere at office space to Fruity Loops inc $2.500 The company's accountant recommended that they should use the average cost method in order to determine the cost of the inventory old but he is not sure about the consequences it may have on their financial situation QUESTION 1 (20 points) 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 . 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 (40 points: 30 points for the calculation and 10 for explanations) 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 CUFO method Calculate the batances of the inventory at the end of the month for each valuation method and provide explanations of the calculations QUESTION 3 (15 points) In order to compare with the records made by her accountant, Julia 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. QUESTION 4(15 points) Julia's accountant insisted that he should use a perpetual inventory system instead of a periodic Inventory system and the average cost method for the valuation of inventory a. Do you agree with his advice (justify your answer)? b. Would the balance of the inventory and the net income be the same at the end of the month? QUESTIONS (10 points: 5 for calculation and for explanation) Julia would like to know a forecast of the number of days to sell the inventory based on the results of the month of February. Please forecast the average number of days to sell inventory as well as how many times inventory is sold per year. Explain your calculation and describe the steps followed QUESTION 6 15 points Julia expects that the prices of the merchandises purchases) will dramatically decrease in the near future as a result of the COVID 19 crisis Which method of valuation of the inventory would you thus recommend to Julia? Explain your answer. BUSINESS CASE (100 points) podia has recently opened a dry fruits wholesale company descared to the sale of peanuti, almonds and pistachiot. The company's name in The Nuthouse The Nuthouse was founded during 2020 Alia's passion, longevity and wealth of knowledge in the industry led to The Nuthouse expanding, Creating a network of partners that spans farming operations in the key growing territories of South Africa THE NUTHOUSE Australia, Kenya, Malawi, Zimbabwe, Mocambique and track Sin 2010 The processing factories surpass global food safety standards and are equipped with state of the art technology During February, its first month of activity. The Nuthouse made the following transaction Price perkt Amon February 1: Purchase of stock Purchase of Pistachios 3 000 $11 533 000 Purchase of Almonds 4500 56 S27 000 Purchase of Peanuts 6500 $26.000 February 2Purchase of stock Purchase of Pistachios 2000 S1 526000 Purchase of Almond 2.500 $7 $17500 Purchas of Peanuts 2500 $5 $1200 February 4: Sold to several clients Sale of Pistachios $21 552500 Sale of Almonds: $32 536 000 Sale of Peanuts 3500 $ S28 000 February 5. Sold to Fruits Loversine Sale of Pistachios 1000 $21 $21000 Sale of Almond 1500 S12 $18000 Sale of Peanuts 2000 513 000 2.500 3000 $15 2000 2.500 S30 000 522500 4000 SM6000 6500 512 500 February 11: Purchase of stock Purchase of Prachios Purchase of almond February 12. Sale to Peanuts Lovers inc. Sale of Peanuts February 13 Purchase of stock Purchase of Peanuts February 18Sold to several dients Sale of Pistachios Sale of Almond Sale of Peanuts February 24 Purchased from various suppliers Sale of Pistachior Sale of Almond Sale of Peanuts 1 500 2000 3500 522 $14 $10 S3000 525000 535 000 1500 1500 1 500 $14 $10 $5 71000 $15 000 $7500 Over and above these transaction, the company has had the following expenses Salaries 55650 Electricity bal 5560 Rental expense: Equipment $1 150 Rental expense: Ware and office 51 550 Miscellaneous expenditure $1050 Rental come Sublettere at office space to Fruity Loops inc $2.500 The company's accountant recommended that they should use the average cost method in order to determine the cost of the inventory old but he is not sure about the consequences it may have on their financial situation QUESTION 1 (20 points) 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 . 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 (40 points: 30 points for the calculation and 10 for explanations) 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 CUFO method Calculate the batances of the inventory at the end of the month for each valuation method and provide explanations of the calculations QUESTION 3 (15 points) In order to compare with the records made by her accountant, Julia 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. QUESTION 4(15 points) Julia's accountant insisted that he should use a perpetual inventory system instead of a periodic Inventory system and the average cost method for the valuation of inventory a. Do you agree with his advice (justify your answer)? b. Would the balance of the inventory and the net income be the same at the end of the month? QUESTIONS (10 points: 5 for calculation and for explanation) Julia would like to know a forecast of the number of days to sell the inventory based on the results of the month of February. Please forecast the average number of days to sell inventory as well as how many times inventory is sold per year. Explain your calculation and describe the steps followed QUESTION 6 15 points Julia expects that the prices of the merchandises purchases) will dramatically decrease in the near future as a result of the COVID 19 crisis Which method of valuation of the inventory would you thus recommend to Julia? Explain your