t the beginning of November, Yoshi Inc.’s inventory consists of 67 units with a cost per unit of $96. The following transactions occur during the month of November. November 2 Purchase 75 units of inventory on account from Toad Inc. for $100 per unit, terms 1/10, n/30. November 3 Pay cash for freight charges related to the November 2 purchase, $150. November 9 Return 25 defective units from the November 2 purchase and receive credit. November 11 Pay Toad Inc. in full. November 16 Sell 100 units of inventory to customers on account, $12,300. [Hint: The cost of units sold from the November 2 purchase includes $100 unit cost plus $3 per unit for freight less $1 per unit for the purchase discount, or $102 per unit.] November 20 Receive full payment from customers related to the sale on November 16. November 21 Purchase 53 units of inventory from Toad Inc. for $106 per unit, terms 3/10, n/30. November 24 Sell 65 units of inventory to customers for cash, $7,400. (Note: For calculating the cost of inventory sold, ignore the possible purchase discount on November 20.) Requirments 1. Assuming that Yoshi Inc. uses a FIFO perpetual inventory system to maintain its internal inventory records, record the transactions. 2. Suppose by the end of November that the remaining inventory is estimated to have a net realizable value per unit of $82, record any necessary adjustment for the lower of cost and net realizable value 3. Prepare the top section of the multiple-step income statement through gross profit for the month of November after the adjustment for lower of cost and net realizable value.

Century 21 Accounting Multicolumn Journal

11th Edition

ISBN:9781337679503

Author:Gilbertson

Publisher:Gilbertson

Chapter20: Accounting For Inventory

Section: Chapter Questions

Problem 1MP

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At the beginning of November, Yoshi Inc.’s inventory consists of 67 units with a cost per unit of $96. The following transactions occur during the month of November.

November	2	Purchase 75 units of inventory on account from Toad Inc. for $100 per unit, terms 1/10, n/30.
November	3	Pay cash for freight charges related to the November 2 purchase, $150.
November	9	Return 25 defective units from the November 2 purchase and receive credit.
November	11	Pay Toad Inc. in full.
November	16	Sell 100 units of inventory to customers on account, $12,300. [Hint: The cost of units sold from the November 2 purchase includes $100 unit cost plus $3 per unit for freight less $1 per unit for the purchase discount, or $102 per unit.]
November	20	Receive full payment from customers related to the sale on November 16.
November	21	Purchase 53 units of inventory from Toad Inc. for $106 per unit, terms 3/10, n/30.
November	24	Sell 65 units of inventory to customers for cash, $7,400. (Note: For calculating the cost of inventory sold, ignore the possible purchase discount on November 20.) Requirments 1. Assuming that Yoshi Inc. uses a FIFO perpetual inventory system to maintain its internal inventory records, record the transactions. 2. Suppose by the end of November that the remaining inventory is estimated to have a net realizable value per unit of $82, record any necessary adjustment for the lower of cost and net realizable value 3. Prepare the top section of the multiple-step income statement through gross profit for the month of November after the adjustment for lower of cost and net realizable value.

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