Required a. Prepare the purchase entry assuming a perpetual inventory system. b. Determine the value of ending inventory assuming the following quantities are in inventory at year-end: grade A, 120 bags; grade B, 96 bags; and grade C, 48 bags. c. Prepare the entry for sale of 24 bags of grade A pecans at a market price of $6.75 cash per bag. Note: Carry all decimals in calculations; round the final answer to the nearest dollar.
Required a. Prepare the purchase entry assuming a perpetual inventory system. b. Determine the value of ending inventory assuming the following quantities are in inventory at year-end: grade A, 120 bags; grade B, 96 bags; and grade C, 48 bags. c. Prepare the entry for sale of 24 bags of grade A pecans at a market price of $6.75 cash per bag. Note: Carry all decimals in calculations; round the final answer to the nearest dollar.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
do not give solution in image format
Transcribed Image Text:Valuing Inventory and Recording Entries Using Relative Sales Value Method
AVC Inc. purchased 1,440 bags of pecans that cost $5,040. The company also incurred $360 for transportation and grading.
The relative sales value method is used to allocate the lump sum cost. The pecans graded out as follows.
Grade Quantity (bags) Current Market Price per Bag
480
$6.75
720
6.00
120
4.50
120
0.00
A
B
с
Waste
Required
a. Prepare the purchase entry assuming a perpetual inventory system.
b. Determine the value of ending inventory assuming the following quantities are in inventory at year-end: grade A, 120 bags;
grade B, 96 bags; and grade C, 48 bags.
c. Prepare the entry for sale of 24 bags of grade A pecans at a market price of $6.75 cash per bag.
Note: Carry all decimals in calculations; round the final answer to the nearest dollar.
a.
b. Inventory-Grade A $
Inventory-Grade B
Inventory-Grade C
C.
To record the purchase of inventory.
Total
Account Name
$
Account Name
To record the sale of pecans.
<
<< <
Dr.
Dr.
Cr.
Cr.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
Knowledge Booster
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education