Mt. Horeb Alpaca Co. has a herd of 150 alpaca. The alpaca are sheared once a quarter to harvest very valuable alpaca wool that is used in designer sweaters. Mt. Horeb has the following information related to the alpaca herd at July 1, 2019, and during the first quarter of the fiscal year. Alpaca Carrying value (equal to net realizable value), July 1, 2019.....................$120,000 Change in fair value due to growth and price changes................................7,700 Decrease in fair value due to harvest.....................................................(975) Alpaca wool harvested during the first quarter (at net realizable value)...........13,000 Instructions a. Prepare the journal entries for Mt. Horeb's biological asset (Alpaca herd) for the first quarter. b. Prepare the journal entries for the Alpaca wool harvested in the first quarter. c. Prepare the journal entry when the Alpaca wool is sold for $14,500.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Mt. Horeb Alpaca Co. has a herd of 150 alpaca. The alpaca are sheared once a quarter to harvest very valuable alpaca wool that is used in designer sweaters. Mt. Horeb has the following information related to the alpaca herd at July 1, 2019, and during the first quarter of the fiscal year.
Alpaca
Carrying value (equal to net realizable value), July 1, 2019.....................$120,000
Change in fair value due to growth and price changes................................7,700
Decrease in fair value due to harvest.....................................................(975)
Alpaca wool harvested during the first quarter (at net realizable value)...........13,000
Instructions
a. Prepare the journal entries for Mt. Horeb's biological asset (Alpaca herd) for the first quarter.
b. Prepare the journal entries for the Alpaca wool harvested in the first quarter.
c. Prepare the journal entry when the Alpaca wool is sold for $14,500.
d. Briefly discuss the impact on income of the following events related to the alpaca biological asset: (1) a female alpaca gives birth to a baby alpaca, and (2) an older alpaca can only be sheared once every other quarter due to irritation caused by repeated shearing over its life.

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education