Question
Jane has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios.. During February, its first month of activity,
Jane has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios..
During February, its first month of activity, The Nuthouse made the following transactions:
|
| Kg | Price perKg | Amount | ||
| February 1: Purchase of stock | |||||
| Purchase of Pistachios | 3 000 | $11 | $33 000 | ||
| Purchase of Almonds: | 4 500 | $6 | $27 000 | ||
| Purchase of Peanuts: | 6 500 | $4 | $26 000 | ||
| February 2: Purchase of stock | |||||
| Purchase of Pistachios | 2 000 | $13 | $26 000 | ||
| Purchase of Almonds: | 2 500 | $7 | $17 500 | ||
| Purchase of Peanuts: | 3 000 | $5 | $15 000 | ||
| February 4: Sold to several clients | |||||
| Sale of Pistachios: | 2 500 | $21 | $52 500 | ||
| Sale of Almonds: | 3 000 | $12 | $36 000 | ||
| Sale of Peanuts: | 3 500 | $8 | $28 000 | ||
| February 5: Sold to Fruits Lovers Inc. | |||||
| Sale of Pistachios: | 1 000 | $21 | $21 000 | ||
| Sale of Almonds: | 1 500 | $12 | $18 000 | ||
| Sale of Peanuts: | 2 000 | $9 | $18 000 | ||
| February 11: Purchase of stock | |||||
| Purchase of Pistachios | 2 000 | $15 | $30 000 | ||
| Purchase of almonds: | 2 500 | $9 | $22 500 | ||
| February 12: Sale to Peanuts Lovers Inc. | |||||
| Sale of Peanuts: | 4 000 | $9 | $36 000 | ||
| February 13: Purchase of stock | |||||
| Purchase of Peanuts | 6 500 | $5 | $32 500 | ||
| February 18: Sold to several clients | |||||
| Sale of Pistachios: | 1 500 | $22 | $33 000 | ||
| Sale of Almonds: | 2 000 | $14 | $28 000 | ||
| Sale of Peanuts: | 3 500 | $10 | $35 000 | ||
| February 24: Purchased from various suppliers | |||||
| Purchase of Pistachios: | 1 500 | $14 | $21 000 | ||
| Purchase of Almonds: | 1 500 | $10 | $15 000 | ||
| Purchase of Peanuts: | 1 500 | $5 | $7 500 | ||
Over and above these transactions, the company has had the following expenses:
| Salaries | $5 650 |
| Electricity bill | $560 |
| Rental expense: Equipment | $1 150 |
| Rental expense: Warehouse and office | $1 550 |
| Miscellaneous expenditure | $1 050 |
| Rental income: Subletting of office space to Fruity-Loops Inc. | $2 500 |
The companys accountant recommended that they should use the average cost method in order to determine the cost of the inventory
QUESTIONS
1. Prepare an Income statement of the company at the end of February for each one of the products sold by Jane using the following methods of valuation of the inventory: You can ignore all tax consequences.
The average cost method
FIFO method and calculate the balances of the inventory at the end of the month for each valuation method and provide explanations of the calculations.
2. Prepare the journal entries for all the purchases and sales of the products using the FIFO method valuation.
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Managerial Accounting Tools For Business Decision Making Wileyplus Lms Student Package
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
8th Edition
1119390249, 978-1119390244
