HumbleBakes Ltd is a well$-$renowned bakery chain preparing for the festive rush. To

meet its demand for its signature cranberry bread, the company sources a special type

of whole$-$wheat flour.

The following are transactions of HumbleBakes Ltd for November $2023$:

$1$ November: Opening inventory of $3000$ kilograms of flour at R$10$ per kilogram.

$2$ November: Purchased an additional $500$ kilograms of flour from FlourMasters Ltd

at R$12$ per kilogram.

$5$ November: Sold $2000$ cranberry bread units to Bakery Delights, a local retailer,

at a $20\%$ markup on cost$.$

$7$ November: Bought $4000$ kilograms of flour from GoldenGrains Ltd$.$ The initial

price was R$13$ per kilogram. However, after a negotiated trade discount, the

effective cost was brought down to R$11$ per kilogram.

$9$ November: Returned $50$ kilograms of the flour purchased on $2$ Nov to

FlourMasters Ltd due to inconsistency in quality. A full refund was provided.

$15$ November: An order of $2300$ cranberry bread units was fulfilled for Downtown

Bakery Stores at a $20\%$ markup on cost$.$

$22$ November : In anticipation of the December rush and not wanting to use aging

flour, HumbleBakes Ltd offered Harbor Cafe Chain a special deal: they sold $3000$

cranberry bread units at $20\%$ markup on cost with an attractive $10\%$ settlement

discount if paid within $8$ days. Harbor Cafe Chain was more than happy to oblige

and paid within $3$ days. $($The cost price per cranberry bread was R$11)$

Additional information:

$1$ kilogram of flour is required to bake one unit of cranberry bread.

HumbleBakes Ltd only trades in cash payments.

HumbleBakes Ltd uses the perpetual recording method and First$-$in$-$first$-$out

cost allocation method.

Ignore VAT and taxation for this question.

Round to two decimals where applicable.

 

REQUIRED:

$3\mathrm{.}1$ Prepare the general journal entries to record all the transactions that took place

on $7$ November and $22$ November considering how the trade and settlement

discounts should be recorded.

  

$3\mathrm{.}2$ Record the above transactions of HumbleBakes Ltd $($including the impact of the

trade discount and settlement discount$)$ in the following general ledger accounts

for the month of November $2023$:

$3\mathrm{.}2\mathrm{.}1$ Inventory $16$ marks

$3\mathrm{.}2\mathrm{.}2$ Sales $5$ marks

Instructions:

Dates are required. Show all calculations.

Accounts must be closed$-$off.

  

$3\mathrm{.}3$ Calculate the gross profit for the month of November $2023.$

  

$3\mathrm{.}4$ Assume HumbleBakes Ltd aims for a $18\%$ mark$-$up on selling price,

determine the selling price of a cranberry bread unit that costs R$15$ to produce.

  

$3\mathrm{.}5$ To maximize revenue per unit sold, based on your calculation in Question $3\mathrm{.}4,$

advise whether Humblebakes Ltd should apply a $18\%$ mark$-$up on selling

price or continue applying a $20\%$ markup on cost on their cranberry breads.

Assume that a cranberry bread cost R$15$ per unit to produce.

  

$3\mathrm{.}6$ Assume HumbleBakes Ltd adopted the weigted average cost allocation method

$($instead of FIFO$).$ Calculate the Cost of Goods Sold $($COGS$)$ for the flour for

the month of November $2023.$