Vernon Corporation builds sailboats. On January 1, 2015, the company had the following account balances: $40,000 for
Question:
Vernon uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account.
Required
a. Use the horizontal financial statements model, as illustrated here, to record Vernons business events. The first row shows beginning balances.
b. If Vernon desires to earn a profit equal to 20 percent of cost, for what price should it sell the boat?
c. If the boat is not sold by year-end, what amount would appear in the Work in Process Inventory and Finished Goods Inventory on the balance sheet for Boat 25?
d. Is the amount of inventory you calculated in Requirement c the actual or the estimated cost of the boat?
e. When is it appropriate to use estimated inventory cost on a year-end balancesheet?
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Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
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