BAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,8oo. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel" tablets. 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) July 8 July 31 August 4 A new batch of 67 tablets was purchased at a total cost of $465,650 5 of the tablets purchased on August 4 were returned to the supplier, as they were not of the model ordered. August 10 August 31 During the month 60 tablets were sold at a price of $10,350 each. A customer, to whom 9 tablets were sold during the first business day of August, returned 3 of the instruments, as they were of another brand. September 4 | Owing to an increased demand, a further 115 tablets were purchased at a cost of $7,900 each; these were subject to a trade discount of 2% each. September 10 September 30 121 tablets were sold during September at a unit selling price of $11,085. September 30 An actual count of inventory was carried out which revealed that there were 34 units of the "Alcatel" brand of merchandise in the store room. Unless otherwise stated, assume that all purchases were on account and received on the dates stated. Required: Prepare a perpetual inventory record for this merchandise, using the first in, first out (FIFO) method of inventory valuation to determine BAYWEST's cost of goods sold for the quarter and the value of ending. (A) Given that selling, distribution and administrative costs associated with the Alcatel brand of tablets for the quarter were $42,844, $38,120 and $157,076 respectively, prepare an income statement for BAYWEST Stationery & Supplies (Alcatel) for the quarter ended September (B) 30, 2020. (C) Journalize the transactions for the month of July, assuming the company uses a: Periodic inventory system Perpetual inventory system Wheels & Deals Limited uses 60,000 batteries each year in its production of motorcycles at a cost (D) of $450 per battery. The cost of placing an order is $75.00. The cost of holding one unit of inventory for one year is o.5% of the unit purchase price. Currently, Wheels & Deals Limited places 12 orders of 5,000 batteries per year. Compute the cost Wheels & Deals' current inventory policy. Is this the minimum cost? Explain.

BAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,8oo. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel" tablets. 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) July 8 July 31 August 4 A new batch of 67 tablets was purchased at a total cost of $465,650 5 of the tablets purchased on August 4 were returned to the supplier, as they were not of the model ordered. August 10 August 31 During the month 60 tablets were sold at a price of $10,350 each. A customer, to whom 9 tablets were sold during the first business day of August, returned 3 of the instruments, as they were of another brand. September 4 | Owing to an increased demand, a further 115 tablets were purchased at a cost of $7,900 each; these were subject to a trade discount of 2% each. September 10 September 30 121 tablets were sold during September at a unit selling price of $11,085. September 30 An actual count of inventory was carried out which revealed that there were 34 units of the "Alcatel" brand of merchandise in the store room. Unless otherwise stated, assume that all purchases were on account and received on the dates stated. Required: Prepare a perpetual inventory record for this merchandise, using the first in, first out (FIFO) method of inventory valuation to determine BAYWEST's cost of goods sold for the quarter and the value of ending. (A) Given that selling, distribution and administrative costs associated with the Alcatel brand of tablets for the quarter were $42,844, $38,120 and $157,076 respectively, prepare an income statement for BAYWEST Stationery & Supplies (Alcatel) for the quarter ended September (B) 30, 2020. (C) Journalize the transactions for the month of July, assuming the company uses a: Periodic inventory system Perpetual inventory system Wheels & Deals Limited uses 60,000 batteries each year in its production of motorcycles at a cost (D) of $450 per battery. The cost of placing an order is $75.00. The cost of holding one unit of inventory for one year is o.5% of the unit purchase price. Currently, Wheels & Deals Limited places 12 orders of 5,000 batteries per year. Compute the cost Wheels & Deals' current inventory policy. Is this the minimum cost? Explain.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Transcribed Image Text:BAYWEST Stationery & Supplies located in Montego Bay, Jamaica, sells a variety of school supplies including several brands of tablets. The business uses a perpetual inventory system and adjusts cost of goods sold for any shortage or excess inventory. BAYWEST began the third quarter (July to September) of 2020 with 30 (Alcatel) tablets at a total cost of $187,8oo. During the quarter, with the onset of the COVID-19 pandemic, the business completed the following transactions relating to the “Alcatel" tablets. 98 tablets were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each tablet to have the inventory shipped from the point of purchase to their warehouse. The sales for July were 85 tablets which yielded total sales revenue of $809,030. (25 of these tablets were sold on account to longstanding customers) July 8 July 31 August 4 A new batch of 67 tablets was purchased at a total cost of $465,650 5 of the tablets purchased on August 4 were returned to the supplier, as they were not of the model ordered. August 10 August 31 During the month 60 tablets were sold at a price of $10,350 each. A customer, to whom 9 tablets were sold during the first business day of August, returned 3 of the instruments, as they were of another brand. September 4 | Owing to an increased demand, a further 115 tablets were purchased at a cost of $7,900 each; these were subject to a trade discount of 2% each. September 10 September 30 121 tablets were sold during September at a unit selling price of $11,085. September 30 An actual count of inventory was carried out which revealed that there were 34 units of the "Alcatel" brand of merchandise in the store room. Unless otherwise stated, assume that all purchases were on account and received on the dates stated. Required: Prepare a perpetual inventory record for this merchandise, using the first in, first out (FIFO) method of inventory valuation to determine BAYWEST's cost of goods sold for the quarter and the value of ending. (A) Given that selling, distribution and administrative costs associated with the Alcatel brand of tablets for the quarter were $42,844, $38,120 and $157,076 respectively, prepare an income statement for BAYWEST Stationery & Supplies (Alcatel) for the quarter ended September (B) 30, 2020. (C) Journalize the transactions for the month of July, assuming the company uses a: Periodic inventory system Perpetual inventory system Wheels & Deals Limited uses 60,000 batteries each year in its production of motorcycles at a cost (D) of $450 per battery. The cost of placing an order is $75.00. The cost of holding one unit of inventory for one year is o.5% of the unit purchase price. Currently, Wheels & Deals Limited places 12 orders of 5,000 batteries per year. Compute the cost Wheels & Deals' current inventory policy. Is this the minimum cost? Explain.

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