Question
Kitco Inc. is in the wholesale business that buys linseed oil which is used in the paint manufacturing business to add gloss to the paint.
Kitco Inc. is in the wholesale business that buys linseed oil which is used in the paint manufacturing business to add gloss to the paint. The company buys linseed oil from many crushing plants throughout the United States and stores it in a tank farm with a total capacity of 1.5 million gallons at their headquarters. It sells linseed oil to paint manufacturers and also to big-box hardware stores. Kitco Inc. offers a cash discount off of its list price of $8.50 per gallon with terms of 2/10 net 30. In addition to the cash discount the company also offers a $.25 quantity discount per gallon on orders for 500,000 or more. At the beginning of October, the company had in storage 600,000 gallons of linseed oil in its storage tanks with an average cost of five dollars per gallon. The company uses the Periodic (Physical) inventory systems and counts the inventory at the end of each month to prepare its internal financial statements. During the month of October and November, the company had the following transactions:
Question: 10/31. Took a reading of the storage tank farms linseed oil tanks and found that 3,000 gallons of linseed oil had been inadvertently spilled while filling paint cans.
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