Question $2$

RAZR WIRELESS sells a variety of mobile telephone accessories including several brands of Wireless Earbuds

Bluetooth Headphones. The earbuds are sold in cases, with each case containing a pair of earbuds. RAZR began

the last quarter $($October to December$)$ of $2021$ with $30$ cases of the $($TOZO T$6)$ earbuds at a total cost of $$187,800.$

During the quarter the business completed the following transactions relating to the "TOZO T$6"$ earbuds:

Unless otherwise stated, assume that all purchases were on account and received on the dates stated.

Required:

a$)$ Prepare a perpetual inventory record for this merchandise, using the first in$,$ first out $($FIFO$)$ method of

inventory valuation to determine RAZR's cost of goods sold for the quarter and the value assigned to

ending inventory.

$(20$ marks$)$

b$)$ Given that selling, distribution and administrative costs associated with the TOZO T$6$ brand of earbuds for

the quarter were $$42,844,$$$38,120,$ and $$157,076$ respectively, prepare an income statement for RAZR

WIRELESS $($TOZO T$6)$ for the quarter ended December $31,2021.$

$(6$ marks$)$

c$)$ Journalize the transactions for the month of October, assuming the freight was paid by cash and the

business uses a: $-$ Periodic inventory system.

$,$ Perpetual inventory system

$(7$ marks$)$

d$)$ Explain the difference between a product cost and a period cost. How does the product cost of a

manufacturer differ from the product cost of a merchandiser?

Provide workings for all where necessary.