QUESTION 2 Prepare an Income statement of the company at the end of February for each one of the products sold by Julia using the
following methods of valuation of the inventory: You can ignore all tax consequences.
a. The average cost method
b. 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.
QUESTION 3 In order to compare with the records made by her accountant, Julia asks you to prepare the journal entries for all the
purchases and sales of the products using the FIFO method valuation.
TASK 3.3 WRITTEN ASSESSMENT: FINAL ASSESSMENT BUSINESS CASE Julia has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios. The company's name is "The Nuthouse". The Nuthouse was founded during 2020. Julia's passion, longevity and wealth of knowledge in the industry led to the Nuthouse expanding rapidly, creating a network of partners that spans farming operations in the key growing territories of South Africa, Australia, Kenya, Malawi, Zimbabwe, Mozambique and Brazil. THE NUTHOUSE Since 2020 The processing factories surpass global food safety standards and are equipped with state of the art technology. During February, its first month of activity, The Nuthouse made the following transactions: Kg Price per kg Amount February 1: Purchase of stock Purchase of Pistachios 3 000 $11 $33 000 Purchase of Almonds: 4 500 $6 $27 000 $26 000 Purchase of Peanuts: 6 500 $4 February 2: Purchase of stock Purchase of Pistachios 2 000 $13 $26 000 Purchase of Almonds: 2 500 $7 $17 500 Purchas of Peanuts: 3 000 $5 $15 000 February 4: Sold to several clients Sale of Pistachios: 2 500 $21 $52 500 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 2 500 $7 $17 500 Purchase of Almonds: Purchas 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 2 000 $9 $18 000 Sale of Peanuts: 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: $5 650 $560 Salaries Electricity bill Rental expense: Equipment Rental expense: Warehouse and office Miscellaneous expenditure Rental income: Subletting of office space to Fruity-Loops Inc. $1 150 $1 550 $1 050 $2 500 The company's accountant recommended that they should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the consequences it may have on their financial situation. The BCO 114 Accounting class of the 2021 Fall semester decided to create a network of students that provide companies with a second opinion based on their technical know-how in accounting. This company is called "Global Accountants Inc." and was created to assist company's in understanding and accounting for their business transactions accurately - the students are at the forefront of technical accounting concepts, especially after their recent studies in Inventory processes TASK 3.3 WRITTEN ASSESSMENT: FINAL ASSESSMENT BUSINESS CASE Julia has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios. The company's name is "The Nuthouse". The Nuthouse was founded during 2020. Julia's passion, longevity and wealth of knowledge in the industry led to the Nuthouse expanding rapidly, creating a network of partners that spans farming operations in the key growing territories of South Africa, Australia, Kenya, Malawi, Zimbabwe, Mozambique and Brazil. THE NUTHOUSE Since 2020 The processing factories surpass global food safety standards and are equipped with state of the art technology. During February, its first month of activity, The Nuthouse made the following transactions: Kg Price per kg Amount February 1: Purchase of stock Purchase of Pistachios 3 000 $11 $33 000 Purchase of Almonds: 4 500 $6 $27 000 $26 000 Purchase of Peanuts: 6 500 $4 February 2: Purchase of stock Purchase of Pistachios 2 000 $13 $26 000 Purchase of Almonds: 2 500 $7 $17 500 Purchas of Peanuts: 3 000 $5 $15 000 February 4: Sold to several clients Sale of Pistachios: 2 500 $21 $52 500 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 2 500 $7 $17 500 Purchase of Almonds: Purchas 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 2 000 $9 $18 000 Sale of Peanuts: 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: $5 650 $560 Salaries Electricity bill Rental expense: Equipment Rental expense: Warehouse and office Miscellaneous expenditure Rental income: Subletting of office space to Fruity-Loops Inc. $1 150 $1 550 $1 050 $2 500 The company's accountant recommended that they should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the consequences it may have on their financial situation. The BCO 114 Accounting class of the 2021 Fall semester decided to create a network of students that provide companies with a second opinion based on their technical know-how in accounting. This company is called "Global Accountants Inc." and was created to assist company's in understanding and accounting for their business transactions accurately - the students are at the forefront of technical accounting concepts, especially after their recent studies in Inventory processes
