Please solve question 25 24) Metro Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2020, the following transactions related to receivables occurred: 2/28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note. 3/31 Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 10%. The $8,000 payment is due on March 31, 2019.4/3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Metro uses the gross method to account for cash discounts.4/11 Collected the entire amount due from Carr Co.6/30 Discounted the Lennox, Inc., note at the bank. The bank’s discount rate is 12%. The note was discounted without recourse. 12/31 An adjusting entry is recorded for the Maddox note.Required:Prepare the necessary journal entries for Metro for each of the above dates. For transactions involving the sale of merchandise, ignore the entry for the cost of goods sold (round all calculations to the nearest dollar). DateAccount titles and ExplanationsDebit ($)Credit ($)Feb-2810% Notes receivables10000 Sales Revenue 10000 ( To record notes receivable accepted ) Mar-31Notes receivables8000 Discount ( 8000 * 10% ) 800 Sales revenue 7200 ( To record non interest bearing note ) Apr-03Account receivables7000 Sales revenue 7000 ( To record merchandise sold ) Apr-11Cash6860 Sales discount ( 7000 * 2% )140 Account receivables 7000 ( To record cash received ) Jun-30Interest receivables ( 10000 * 10% * 4/12 )333 Interest revenue 333 Cash ( see working )10266 Loss on sale of notes receivable67 Interest receivables 333 Notes receivable 10000 Dec-31Discount600 Interest revenue ( 8000 * 10% * 9 /12 ) 600 ( To record adjusting entry for Maddox note ) Working :Calculation of cash received :Amount ($)Face value10000Interest for 7 month at 10%583Less : Discount on 12% ( 10583 * 12% *3/12 )-317Cash received 10266 Use the following to answer the question(s) below: Shown below is the activity for one of the products of Random Creations: January 1 balance, 100 units @ $50Purchases: January 18: 40 units @ $51 January 25: 40 units @ $52Sales: January 22: 60 units January 31: 50 units 25-1) Required: Compute the January 31 cost of ending inventory, assuming Random Creations uses FIFO and periodic inventory system.Cost of ending inventory: $____________________ Your computations: 25-2) Required: Compute the cost of goods sold for January, assuming Random Creations uses LIFO and periodicinventory system. Cost of goods sold: $____________________ Your computations: 25-3) Required: Compute the cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system. Cost of goods sold: $____________________ Your computations: 25-4) Required: Compute the January 31 cost of ending inventory, assuming Random Creations uses average cost and periodic inventory system. Cost of ending inventory: $____________________

The Periodic Inventory system is a system of inventory in which updates are made on periodic basis. This inventory system takes inventory at the begnning of the period add new purchases made during the period and deduct the ending inventory to arrive at cost fo goods sold. Perpetual inventory system is a system of inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software. FIFO (first in first out) is a method of accounting inventory acquired first will be sold first. LIFO (last in first out) is a method of accounting inventory acquired last will be sold first. Calculation as on January 31 cost of ending inventory, assuming Random Creations uses FIFO and periodic inventory system. January 1 balance, 100 units @ $50 = $5000 Add:- Purchases: January 18: 40 units @ $51 = $2040 January 25: 40 units @ $52 = $2080 Less:- Sales: January 22: 60 units @ $50 = ($3000) January 31: 40 units @ $50 =($2000) January 31: 10 units @ $51 =($510) Inventory at the end 70 units = $3310 (30 units × $41 + 40 units × $52) Cost of goods sold = 110 units = $5510 Calculation of cost of goods sold for January, assuming Random Creations uses LIFO and periodic inventory system. January 1 balance, 100 units @ $50 = $5000 Add:- Purchases: January 18: 40 units @ $51 = $2040 January 25: 40 units @ $52 =$2080 Less:- Sales: January 22: 40 units @ $52 = ($2080) 20 units @ $51 = ($1020) January 31: 20 units @ $51 = ($1020) 30 units @ $50 = ($1500) Inventory at the end 70 units @ $50 = $3500 Cost of goods sold = 110 units = $5620 Calculation of cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system. January 1 balance, 100 units @ $50 = $5000 Add:- Purchases: January 18: 40 units @ $51 = $2040 Less:- Sales January 22: 40 units @ $51 = ($2040) 20 units @ $50 =($1000) Balance inventory 22: 80 units @ $50 = 4000 Add:- Purchases January 25: 40 units @ $52 = $2080 Total 120 Units = $6080 Less Sales: January 31: 40 units @ $52 = ($2080) 10 units @ $50 = ($1000) Inventory at the end 70 units = $3000 Cost of goods sold 110 units = $3040 + $3080 = $6120 Note:- As per our policy and guidelines we can answer only three parts in one go for rest parts to answer kindly resend again specifying the parts to be answered. Thank you.

Answered: 24) Metro Company sells lawn and garden…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please solve question 25

24) Metro Company sells lawn and garden products to wholesalers. The company’s fiscal year-end is December 31. During 2020, the following transactions related to receivables occurred:

2/28 Sold merchandise to Lennox, Inc., for $10,000 and accepted a 10%, 7-month note. 10% is an appropriate rate for this type of note.

3/31 Sold merchandise to Maddox Co. and accepted a noninterest-bearing note with a discount rate of 10%. The $8,000 payment is due on March 31, 2019.

4/3 Sold merchandise to Carr Co. for $7,000 with terms 2/10, n/30. Metro uses the gross method to account for cash discounts.

4/11 Collected the entire amount due from Carr Co.

6/30 Discounted the Lennox, Inc., note at the bank. The bank’s discount rate is 12%. The note was discounted without recourse.

12/31 An adjusting entry is recorded for the Maddox note

.Required:

Prepare the necessary journal entries for Metro for each of the above dates. For transactions involving the sale of merchandise, ignore the entry for the cost of goods sold (round all calculations to the nearest dollar).

Date	Account titles and Explanations	Debit ($)	Credit ($)
Feb-28	10% Notes receivables	10000
	Sales Revenue		10000
	( To record notes receivable accepted )

Mar-31	Notes receivables	8000
	Discount ( 8000 * 10% )		800
	Sales revenue		7200
	( To record non interest bearing note )

Apr-03	Account receivables	7000
	Sales revenue		7000
	( To record merchandise sold )

Apr-11	Cash	6860
	Sales discount ( 7000 * 2% )	140
	Account receivables		7000
	( To record cash received )

Jun-30	Interest receivables ( 10000 * 10% * 4/12 )	333
	Interest revenue		333

	Cash ( see working )	10266
	Loss on sale of notes receivable	67
	Interest receivables		333
	Notes receivable		10000

Dec-31	Discount	600
	Interest revenue ( 8000 * 10% * 9 /12 )		600
	( To record adjusting entry for Maddox note )

Working :

Calculation of cash received :	Amount ($)
Face value	10000
Interest for 7 month at 10%	583
Less : Discount on 12% ( 10583 * 12% *3/12 )	-317
Cash received	10266

Use the following to answer the question(s) below:

Shown below is the activity for one of the products of Random Creations:

January 1 balance, 100 units @ $50

Purchases:

January 18: 40 units @ $51

January 25: 40 units @ $52

Sales:

January 22: 60 units

January 31: 50 units

25-1) Required: Compute the January 31 cost of ending inventory, assuming Random Creations uses FIFO and periodic inventory system.

Cost of ending inventory: $____________________

Your computations:

25-2) Required: Compute the cost of goods sold for January, assuming Random Creations uses LIFO and periodicinventory system.

Cost of goods sold: $____________________

Your computations:

25-3) Required: Compute the cost of goods sold for January, assuming Random Creations uses LIFO and perpetual inventory system.

Cost of goods sold: $____________________

Your computations:

25-4) Required: Compute the January 31 cost of ending inventory, assuming Random Creations uses average cost and periodic inventory system.

Cost of ending inventory: $____________________

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