Part 1 (10 marks)

On August 17, 2021, Alpha Limited received an order from Bravo Corp for 6,000 units of its famous Charlene dolls. The selling price is $15 per unit, with terms 2/15, n/30, FOB shipping point. Customers may return the merchandise within 15 days. Based on Alpha Limiteds past experience, product returns average 8% of sales. Customers also normally pay within 15 days to avail of the discount. Each Charlene doll costs Alpha Limited $7 to produce. Alpha Limited ships the dolls on August 28, 2021.

Required:

1. Calculate the amount of revenue to be recognized by Alpha Limited (4 marks)

2. Prepare the journal entries required to record the revenue at the appropriate date (6 marks)

Part 2 (5 marks)

Jupiter Ltd. is a retailer selling automotive belts. The company began the year, on January 1, 2021 with inventory on hand of 1,000 belts for a total price of $4,000. Due to a shortage in supply, the prices of the belts have been increasing rapidly.

During January, the company made the following purchases and returns:

Jan. 4, 2021 Purchased 3,000 belts at $5 per belt

Jan. 14, 2021 Purchased 1,200 belts at $7 per belt

Jan. 18, 2021 Returned 250 belts from the Jan 14 purchase due to quality defects

Jan. 29, 2021 Purchased 3,000 belts at $8 per belt.

During January, the following sales and sales returns took place:

Jan. 9, 2021 Sold 2,900 belts at a selling price of $14 per belt

Jan. 15, 2021 Accepted a return of 200 belts from the Jan 9 sale. These were returned into inventory

Jan. 18, 2021 Sold 3,600 belts at a selling price of $16 per belt.

Required:

Assume that Jupiter Ltd. uses the periodic inventory system and the weighted average cost flow assumption. Calculate the cost of goods sold and the value of ending inventory at January 31, 2021