Montez Muffins and More is a bakery located in New York. Montez purchases a great deal of
Question:
Montez Muffins and More is a bakery located in New York. Montez purchases a great deal of flour in bulk from a wholesaler. The wholesaler offers purchase discounts for fast payment. Montez purchased 600 pounds of flour for $100 total on May 1, under terms 2/10 n/30. Determine the amount Montez should pay under the following scenarios:
- Montez pays the full balance on May 25.
- Montez pays the full balance on May 10.
- Montez pays half the balance on May 10 and half on May 25.
Magic Carpets Inc. sells a full line of area rugs, from top quality to bargain basement. Economic conditions have hit the textile industry, and Magic Carpets accountant is concerned that its rug inventory may not worth the amount Magic paid for it. Information about three lines of rugs is found below:
| Cost | Sales Price | Cost to Sell | Number of rugs in inventory |
High Flyers | $235 | $250 | $25 | 80 |
Midflight | 150 | 220 | 25 | 120 |
Under the Radar | 100 | 109 | 22 | 160 |
Determine market value for each type of rug.
Determine lower-of-cost-or-market for each type of rug.
Determine if Magic Carpets has suffered a loss of value on its inventory, and if so, what the amount of loss is.
Show the journal entry to record the loss if there is one.
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws