Avon ltd. applies deductible VAT method and perpetual inventory system. In 2022, the following information is below:
Question:
Avon ltd. applies deductible VAT method and perpetual inventory system. In
2022, the following information is below: (Unit: CU) 1. The direct material cost incurred: 900,000
2. Direct labor cost incurred: 450, 000
3. Manufacturing overhead cost incurred: 250, 000
4. During the year, there were 1, 000 finished products were put into the warehouse and 50 units of work in progress (total cost of the work in progress: 85,000)
5. During the year, ABC:
Sold on credit 500 finished goods to Cane Ltd. with price exclusive of VAT: X/product Sent on consignment 350 goods to Pearl Ltd. with price inclusive of VAT of Y/product
Received 20 returned goods from Cane ltd. There were 270 goods send on consignment to Pearl Ltd. was sold. The agent make payment after deducting commission fee. Commission fee is 5% on price before VAT
6. Administrative expenses incurred: 500,000,
7. Selling expenses incurred: 200,000
Required:
1. Fill in X, and Y with the suitable amount, so the company would make a profit.
2. Prepare journal entries (including closing entries to calculate the cost of goods manufactured and determine the business's performance) from the given information.
3. Prepare Income Statement
Noted that:
Beginning balances are as follows: Account 154:10(; Account 155/200 * 1, 020
The company applies the FIFO method for calculating the cost of inventory, with CIT rate of 20%
Expert Answer:
1 From the information given we can calculate the cost of goods sold as follows Direct material cost incurred 900000 Direct labor cost incurred 450000 Manufacturing overhead cost incurred 250000 Total ... View the full answer
