BUSINESS CASE (100 points) Jim has recently opened a dry fruits wholesale company dedicated to the...
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BUSINESS CASE (100 points) Jim has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios. During its first month of activity, the company has made the following transactions: Kg Price per Kg Amount $30,000 February 2: Purchase of Pistachios: 2500 $12 Purchase of Almonds: 4000 $7 $28,000 Purchas of Peanuts: 6000 $5 $30,000 February 3: Purchase of Pistachios: 1500 $14 $21,000 Purchase of Almonds: 2000 $8 $16,000 Purchas of Peanuts: 2000 $6 $12,000 February 6: Sold to several clients: Pistachios: 2000 $22 $44,000 Almonds: 2500 $13 $32,500 Peanuts: 3000 $9 $27,000 February 6: Sold to Fruits Lovers Inc.: $22 $13 $10 $16 $10 $10 $6 $23 $15 $11 $15 $11 $6 Pistachios: 500 $11,000 Almonds: 1000 $13,000 Peanuts: 1500 $15,000 February 12 Purchase of Pistachios: 1500 $24,000 Purchase of almonds: 2000 $20,000 February 13: Sale of peanuts to Peanuts Lovers Inc.: 3500 $35,000 February 14: Purchase of Peanuts 6000 $36,000 February 19: Sold to several clients: Pistachios: 1000 $23,000 Almonds: 1500 $22,500 Peanuts: 3000 $33,000 February 25: Purchased from various suppliers: Pistachios: 1000 $15,000 Almonds: 1000 $11,000 Peanuts: 1000 $6,000 Besides these transactions, the company has had the following expenses: Salaries: $3650 Electricity bill: $360 Renting of equipment: $950 Rent of warehouse and office: $1.650 Miscellaneous: $1.250 Jim's accountant recommended that he should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the consequences it may have on his financial situation. Relying on your accounting knowledge, Jim asks you the following questions: 2: Prepare an Income statement of the company at the end of February using as method of valuation of the inventory the average cost method, FIFO and LIFO for each one of the products sold by Jim, and calculate the balance of the inventory at the end of the month. Explain the calculations. (40 points: 30 points for the calculation and 10 for explanations) 3: In order to compare with the records made by his accountant, Jim asks you to prepare the different journal entries for the purchases and sales mentioned above for each one of the 3 different methods used above. (15 points) BUSINESS CASE (100 points) Jim has recently opened a dry fruits wholesale company dedicated to the sale of peanuts, almonds and pistachios. During its first month of activity, the company has made the following transactions: Kg Price per Kg Amount $30,000 February 2: Purchase of Pistachios: 2500 $12 Purchase of Almonds: 4000 $7 $28,000 Purchas of Peanuts: 6000 $5 $30,000 February 3: Purchase of Pistachios: 1500 $14 $21,000 Purchase of Almonds: 2000 $8 $16,000 Purchas of Peanuts: 2000 $6 $12,000 February 6: Sold to several clients: Pistachios: 2000 $22 $44,000 Almonds: 2500 $13 $32,500 Peanuts: 3000 $9 $27,000 February 6: Sold to Fruits Lovers Inc.: $22 $13 $10 $16 $10 $10 $6 $23 $15 $11 $15 $11 $6 Pistachios: 500 $11,000 Almonds: 1000 $13,000 Peanuts: 1500 $15,000 February 12 Purchase of Pistachios: 1500 $24,000 Purchase of almonds: 2000 $20,000 February 13: Sale of peanuts to Peanuts Lovers Inc.: 3500 $35,000 February 14: Purchase of Peanuts 6000 $36,000 February 19: Sold to several clients: Pistachios: 1000 $23,000 Almonds: 1500 $22,500 Peanuts: 3000 $33,000 February 25: Purchased from various suppliers: Pistachios: 1000 $15,000 Almonds: 1000 $11,000 Peanuts: 1000 $6,000 Besides these transactions, the company has had the following expenses: Salaries: $3650 Electricity bill: $360 Renting of equipment: $950 Rent of warehouse and office: $1.650 Miscellaneous: $1.250 Jim's accountant recommended that he should use the average cost method in order to determine the cost of the inventory sold but he is not sure about the consequences it may have on his financial situation. Relying on your accounting knowledge, Jim asks you the following questions: 2: Prepare an Income statement of the company at the end of February using as method of valuation of the inventory the average cost method, FIFO and LIFO for each one of the products sold by Jim, and calculate the balance of the inventory at the end of the month. Explain the calculations. (40 points: 30 points for the calculation and 10 for explanations) 3: In order to compare with the records made by his accountant, Jim asks you to prepare the different journal entries for the purchases and sales mentioned above for each one of the 3 different methods used above. (15 points)
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Related Book For
Financial Accounting
ISBN: 978-0078025556
8th edition
Authors: Robert Libby, Patricia Libby, Daniel Short
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