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

 

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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 T6) earbuds at a total cost of $187,800. During the quarter the business completed the following transactions relating to the "TOZO T6" earbuds: October 8 October 31 November 4 November 10 November 30 December 4 December 10 December 30 December 31 98 cases were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each case to have the inventory shipped from the point of purchase to their place of business. The sales for October were 85 cases which yielded total sales revenue of $809,030. (25 of these cases were sold on account to three longstanding customers) A new batch of 67 cases was purchased at a total cost of $465,650 5 of the cases purchased on November 4 were returned to the supplier, as they were not of the type nor model ordered. During the month 60 cases were sold, yielding total revenue of $621,000 A customer, to whom 9 cases were sold during the first business day of November, returned 3 of the cases, as they were of another make and model. Owing to an increased demand, a further 115 cases were purchased at a cost of $7,900 each; these were subject to a trade discount of 2% on each case. 121 cases were sold during December at a unit selling price of $11,085. An actual count of inventory was carried out which revealed that there were 34 cases of the "TOZO T6" brand of merchandise in the storeroom. Unless otherwise stated, assume that all purchases were on account and received on the dates stated. Required: a) b) c) d) 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) Given that selling, distribution and administrative costs associated with the TOZO T6 brand of earbuds for the quarter were $42,844, $38,120, and $157,076 respectively, prepare an income statement for RAZR WIRELESS (TOZO T6) for the quarter ended December 31, 2021. (6 marks) 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) 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? (2 marks) 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 T6) earbuds at a total cost of $187,800. During the quarter the business completed the following transactions relating to the "TOZO T6" earbuds: October 8 October 31 November 4 November 10 November 30 December 4 December 10 December 30 December 31 98 cases were purchased at a cost of $6,202 each. In addition, the business paid a freight charge of $248 cash on each case to have the inventory shipped from the point of purchase to their place of business. The sales for October were 85 cases which yielded total sales revenue of $809,030. (25 of these cases were sold on account to three longstanding customers) A new batch of 67 cases was purchased at a total cost of $465,650 5 of the cases purchased on November 4 were returned to the supplier, as they were not of the type nor model ordered. During the month 60 cases were sold, yielding total revenue of $621,000 A customer, to whom 9 cases were sold during the first business day of November, returned 3 of the cases, as they were of another make and model. Owing to an increased demand, a further 115 cases were purchased at a cost of $7,900 each; these were subject to a trade discount of 2% on each case. 121 cases were sold during December at a unit selling price of $11,085. An actual count of inventory was carried out which revealed that there were 34 cases of the "TOZO T6" brand of merchandise in the storeroom. Unless otherwise stated, assume that all purchases were on account and received on the dates stated. Required: a) b) c) d) 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) Given that selling, distribution and administrative costs associated with the TOZO T6 brand of earbuds for the quarter were $42,844, $38,120, and $157,076 respectively, prepare an income statement for RAZR WIRELESS (TOZO T6) for the quarter ended December 31, 2021. (6 marks) 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) 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? (2 marks)