Nestle Dairy began operations on January 1, 2022, with the purchase of 420 milking cows for...

 

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Nestle Dairy began operations on January 1, 2022, with the purchase of 420 milking cows for $460,000. It has completed the first month of operations and has the following information for its milking cow at the end of January 2022. Milking cows Carrying value, January 1, 2022* Change in fair value due to growth and price changes Decrease in fair value due to harvest Change in carrying value Carrying value, January 31, 2022 Milk harvested during January** $35,000 (1,200) $460,000 33,800 $493,800 $36,000 *The carrying value is measured at fair value less costs to sell (net realizable value). The fair value of milking cows is determined based on market prices of livestock of similar age, breed, and genetic merit. **Milk is initially measured at its fair value less costs to sell (net realizable value) at the time of milking. The fair value of milk is determined based on market prices in the local area. Required: a. Prepare the journal entries for Nestle's biological asset (milking cows) for the month of January 2022. b. Prepare the journal entry for the milk harvested by Nestle during January 2022. c. Nestle sells the milk harvested in January on the local milk exchange and receives $74,000. Prepare the summary journal entry to record the sale of the milk. Nestle Dairy began operations on January 1, 2022, with the purchase of 420 milking cows for $460,000. It has completed the first month of operations and has the following information for its milking cow at the end of January 2022. Milking cows Carrying value, January 1, 2022* Change in fair value due to growth and price changes Decrease in fair value due to harvest Change in carrying value Carrying value, January 31, 2022 Milk harvested during January** $35,000 (1,200) $460,000 33,800 $493,800 $36,000 *The carrying value is measured at fair value less costs to sell (net realizable value). The fair value of milking cows is determined based on market prices of livestock of similar age, breed, and genetic merit. **Milk is initially measured at its fair value less costs to sell (net realizable value) at the time of milking. The fair value of milk is determined based on market prices in the local area. Required: a. Prepare the journal entries for Nestle's biological asset (milking cows) for the month of January 2022. b. Prepare the journal entry for the milk harvested by Nestle during January 2022. c. Nestle sells the milk harvested in January on the local milk exchange and receives $74,000. Prepare the summary journal entry to record the sale of the milk.

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Date a Jan22 Biological AssetMilking Cows 493800 460000 Unrealized Holding Gain or Lo... View the full answer