Question
Jelly Galore (Pty) Ltd (Jelly Galore) is an entity that sells jelly worms. The entity uses the weighted average method to calculate inventory. The entity
Jelly Galore (Pty) Ltd (‘Jelly Galore’) is an entity that sells jelly worms. The entity uses the weighted average method to calculate inventory. The entity uses the perpetual inventory system. To date Jelly Galore has only sold jelly worms in one standard packet size. It is aiming to sell a large variety of jelly sweets in different sizes in the future. Jelly Galore is not a registered VAT vendor.
The following information for the year ended 31 December 2021 is available.
N$ | ||
Inventory 01/01/2021 | 600 boxes | 390 000 |
Inventory 31/12/2021 | 900 boxes | ? |
Creditors 01/01/2021 | n/a | 40 000 |
Creditors 31/12/2021 | n/a | 60 000 |
Inventory is bought in bulk in boxes. Each box contains 100 packets of jelly worms. All inventories are bought on credit. The following purchases took place during the year.
Date | Number of boxes | Total Price (N$) |
20 May 2021 | 500 | 341 000 |
22 September 2021 | 150 | Refer to note 1 |
The following cash sales were made during the year:
Date | Number of packets | Selling price per packet (N$) |
15 March 2021 | 30 000 | 8 |
10 November 2021 | 200 | Refer to note 2 |
Notes:
- 1. On 22 September 2021, 150 boxes were purchased at N$730 per box. Total delivery costs amounted to N$1 000. The supplier granted 5% discount on the retail price.
- 2. 50 of these boxes bought on 22 September 2021 were damaged during a hail storm on 31 October 2021. Jelly Galore had insured the inventory for a total value of N$500 000. Upon inspection of the damaged boxes, it was noted that some of the packets that were on top in the boxes were still usable although it could not be sold in the normal course of business. 200 of these packets were sold to a local children’s home at N$4 per packet on 10 November 2021. The remaining damaged goods were thrown away.
REQUIRED | |||
---|---|---|---|
Calculate the total cost of sales before the write off on inventory to net realizable value for Jelly Galore for the year ended 31 December 2021. Calculate the value of the insurance claim in relation to the goods damaged in the hail storm |
Step by Step Solution
3.40 Rating (162 Votes )
There are 3 Steps involved in it
Step: 1
To calculate the total cost of sales before the writeoff on inventory to net realizable value for Je...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started