Illustration 2 ABC Ltd. buys goods from an overseas supplier. It has recently taken delivery of 1,000 units of component X. The quoted price of component X was 1,200 per unit but ABC Ltd. has negotiated a trade discount of 5% due to the size of the order. The supplier offers an early settlement discount of 2% for payment within 30 days and ABC Ltd. intends to achieve this. Import duties (basic custom duties) of 60 per unit must be paid before the goods are released through custom. Once the goods are released through customs, ABC Ltd. must pay a delivery cost of 5,000 to have the components taken to its warehouse. Calculate the cost of inventory.

Illustration 2 ABC Ltd. buys goods from an overseas supplier. It has recently taken delivery of 1,000 units of component X. The quoted price of component X was 1,200 per unit but ABC Ltd. has negotiated a trade discount of 5% due to the size of the order. The supplier offers an early settlement discount of 2% for payment within 30 days and ABC Ltd. intends to achieve this. Import duties (basic custom duties) of 60 per unit must be paid before the goods are released through custom. Once the goods are released through customs, ABC Ltd. must pay a delivery cost of 5,000 to have the components taken to its warehouse. Calculate the cost of inventory.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The selling price of imported olive oil is $20 per case. Your cost is 15 Euros per case, and the exchange rate is currently 1.25, so it takes 1.25 Euros to buy $1. Your argest customer has ordered 15,000 cases of olive oil. How much is the pretax profit for this transaction? a. $120,000 b. $100,000 c. $90,000 d. $80,000 e. $60,000
8.2)
22 - The export rate for which 30000 dollars of dry pulses were exported to the foreign German company BBN in the form of payment against goods is 1 dollar = 5.60 TL. However, the pulses were noticed to be moist and were returned. Registration to be made?A) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 120 01 ABROAD BUYER 168000 610 01 RETURNED GOODS 168 000B) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 610 01 RETURNED GOODS 168000 120 01 ABROAD BUYER 168000 C) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 612 01 OTHER DISCOUNTS 168000 120 01 ABROAD BUYER 168000 D) THE CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 601 01 ABROAD GOODS SALES 168000 610 01 RETURNED GOODS 168000 E) CODE AND NAME OF THE ACCOUNT WILL RECEIVE DEBT 689 OTHER EXTRAORDINARY GO. LOSS 168000 120 01 ABROAD BUYER 168000
On June 1, 2017, Micro Corp. received an order for parts from a Mexican customer at a price of 1,000,000 Mexican pesos with a delivery date of July 31, 2017. On June 1, when the U.S. dollar–Mexican peso spot rate is $0.115, Micro Corp. entered into a two month forward contract to sell 1,000,000 pesos at a forward rate of $0.12 per peso. Micro designates the forward contract as a fair value hedge of the firm commitment to receive pesos, and the fair value of the firm commitment is measured by referring to changes in the peso forward rate. Micro delivers the parts and receives payment on July 31, 2017, when the peso spot rate is $0.118. On June 30, 2017, the Mexican peso spot rate is $0.123, and the forward contract has a fair value of $2,400.What is Micro’s net increase or decrease in cash flow from having entered into this forward contract hedge? Choose the correct.a. $–0–.b. $1,000 increase in cash flow.c. $1,500 decrease in cash flow.d. $2,000 increase in cash flow.
None
2. EOQ / Production / Discounts A machine company uses 3000 brackets during the course of a year. The brackets are bought from an external supplier at a price of 50 kr. each and will be received the same day as the order is placed. The average ordering cost is 187.50 kr. per order. The company uses an interest rate of 18% to account for the cost of capital, the cost of storage and handling is estimated to 4% and insurance to 3% of the value. You can assume that there are 250 working days in one year. a. Determine the economic order quantity for the brackets. b. Given the optimal order size from a, calculate the following: i Cycle time. i. Average inventory level. i. Annual inventory cost. iv. Annual ordering cost. The company is able to produce the brackets themselves at a rate of 60 per day. The fixed cost of setting up for production run is 600 kr. You can also assume that the variable cost of production is equal to the price when buying from an external supplier. c. What is the…
Accounting A chinese company offers an American buyer rice at US $2500 per M/T CFR New York, the buyer asks for unit price under CIFC5% New York. After checking with the insurer, the seller finds thst the All risks and the war risk rate are 0.5% and 0.04% respectively and the insured amount is 110% of the CFR price. What unit price should the seller quote in order to maintain the same margin?
Chinook, Inc. purchases components from a Japanese company that requires payment in yen (Y); it sells finished products to a German company that pays in euros. On June 1, Chinook ordered components from the Japanese Company costing Y6,890,000 and sold finished goods to the German company with a selling price of $150,000 to be paid in euros. The June 1 spot rates of U.S. dollars for yen and for euros was: $1 = Y106.0 $1 = E0.84 Required: 1. What is the cost of the Y6,890,000 in dollars? 2. How many euros will Chinook receive from the German company in payment for the finished product? 3. What if the exchange rate of dollars for yen was $1 = Y108? What is the cost of the Y6,890,000 in dollars (rounded to the nearest dollar)?
Travel Co. ordered parts costing 50,000 Foreign Currency Units (FCU) from a foreign supplier on March 15 when the spot rate was $0.98 per FCU. A one-month forward contract was signed on that date to purchase 100,000 FCU at a forward rate of $0.99 per FCU. On March 31, the forward rate was $1.01. On April 14, when the parts were received and payment was made, the spot rate was $1.03 per FCU. At what amount should inventory be reported? $50,500 O $49,500 $50,000 $49,000 $51,500
On October 1, 2020, Mertag Company (a U.S.-based company) receives an order from a customer in Poland to deliver goods on January 31, 2021, for a price of 1,004,000 Polish zlotys (PLN). Mertag enters into a forward contract on October 1, 2020, to sell PLN 1,004,000 in four months (on January 31, 2021). U.S. dollar–Polish zloty exchange rates are as follows: Date Spot Rate Forward Rate(to January 31, 2021) October 1, 2020 $ 0.27 $ 0.31 December 31, 2020 0.30 0.34 January 31, 2021 0.32 N/A Mertag designates the forward contract as a fair value hedge of a foreign currency firm commitment. The fair value of the firm commitment is measured by referring to changes in the forward rate, and, therefore, forward points are included in assessing hedge effectiveness. Mertag must close its books and prepare financial statements on December 31. Discounting to present value can be ignored. Prepare journal entries for the foreign currency forward contract,…
Calculated Numeric: Please calculate the amount of custom. Poin Please calculate the amount of customs duty paid for the import of goods in the following scenario: Al Mdina Traders basod in Shrjah mainland area imported 100 mobile phonos from China. The transaction value of goods ("Cost) is AED 2,000 per each mobile phone. The "Insurance" paid is 1% on the cost of goods and the Freight" paid is 2% based on the cost of goods. Keeping in view the rate of custorls duty is 5%, please calculate the customs duty paid by Al Madina Traders to Sharjah Customs Authority? Hint: The Incoterms usad for the Customs deciaration purposes CIF (Cost Insurance Freight).