Question
Question 6 Veronica Fresh is a wholesale distribution business that sells flavoured cheese products to supermarkets. The following relates to the businesss activities during January
Question 6 Veronica Fresh is a wholesale distribution business that sells flavoured cheese products to supermarkets. The following relates to the businesss activities during January 2020: January 1 Opening inventory 2000 boxescost $8.40 6 Sales 800 boxesselling price $14.00 8 Purchases 1000 boxescost $9.00 18 Sales 600 boxesselling price $14.00 23 Purchases 1500 boxescost $9.60 27 Sales 900 boxesselling price $14.50 31 Closing inventory (as per physical stocktake) 2200 boxes Additional information i Two hundred boxes from the 8/1 purchase have passed their use-by date and cannot be sold for human consumption. However, they can be sold as poultry feed for $2 per box. ii Transportation from the supplier to Veronica Fresh costs $1 per box. Transportation from Veronica Fresh to supermarkets costs $1.20 per box and would also apply to boxes sold for poultry feed. Veronica Fresh pays both sets of transportation costs.
Required: a) Calculate the value of closing inventory as provided for in AASB 102, applying the FIFO (first-in-first-out) method. Justify all aspects of your calculation.
b) Calculate the inventory write-down for the month of January 2020. Show your workings.
c) Prepare necessary journal entries to record the inventory write-down from part (b). Narrations are NOT required.
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