Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Farmer Martinez Industries Inc. is in the business of producing organic foods for sale to restaurants and in local markets. The company uses IFRS and

Farmer Martinez Industries Inc. is in the business of producing organic foods for sale to restaurants and in local markets. The company uses IFRS and has a June 30 fiscal year end. As an experiment, the company has decided to try raising organic free-range chickens. On May 1, 2020, Farmer Martinez purchased 90 new hatchlings for cash at a total cost of $920. The company paid cash for feed and labour costs of $140 per month to look after the chicks. Their (acceptable) accounting policy is to capitalize these costs. On June 30, the company estimated that the chickens would mature in mid-October. At year end they had a fair value of $1,700 and the company would have to transport the chickens to their customers at an average cost of $3 per chicken. On October 30, all 90 chickens had matured and the company sold and shipped 50 of the chickens to one of its key customers for $30per chicken. Transportation costs were $3 per chicken, as expected.

(a)

Prepare the journal entries to record the inventory activity relating to the chickens for the month of May. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

May 1

BIOLOGICAL ASSETS

920

CASH

920

(To record the inventory total costs)

May 1

BIOLOGICAL ASSETS

140

CASH

140

(To record the feed and labour costs)

(b)

Prepare the journal entry to record the inventory activity relating to the chickens for the month of June. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

June 30

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Alaskas Permanent Fund Dividend Examining Its Suitability As A Model

Authors: K. Widerquist, M. Howard

2nd Edition

0230112072, 9780230112070

More Books

Students also viewed these Accounting questions