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The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shipping costs in the negotiated purchase price (mixers will be shipped FOB destination), but the supplier cannot guarantee the invoice price. Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory.

The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shipping costs in the negotiated purchase price (mixers will be shipped FOB destination), but the supplier cannot guarantee the invoice price. Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory.

FINANCIAL ACCOUNTING
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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Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Her goals for the next 11 months are to sell one mixer per month and to give two to three classes per week. The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shipping costs in the negotiated purchase price (mixers will be shipped FOB destination), but the supplier cannot guarantee the invoice price. Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory. The following transactions occur in February to May 2021. Feb. 2 16 25 30 31 Apr. 1 13 30 May 4 27 Natalie buys two deluxe mixers on account from Kzinski Supply Co. for $1,150 ($575 each), FOB destination, terms n/30. She sells one deluxe mixer for $1,100 cash. She pays the amount owed to Kzinski. She buys one deluxe mixer on account from Kzinski Supply Co. for $592, FOB destination, terms n/30. Natalie sells two deluxe mixers for a total of $2,200 cash. She pays the amount owed to Kzinski. She buys two deluxe mixers on account from Kzinski Supply Co. for $1,172 ($586 each), FOB destination, terms n/30. She sells three deluxe mixers for a total of $3,300 cash. Natalie pays the amount owed to Kzinski. She buys three deluxe mixers on account from Kzinski Supply Co. for $1,800 ($600 each), FOB destination, terms n/30. She sells one deluxe mixer for $1,100 cash.
Transcribed Image Text:Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Her goals for the next 11 months are to sell one mixer per month and to give two to three classes per week. The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shipping costs in the negotiated purchase price (mixers will be shipped FOB destination), but the supplier cannot guarantee the invoice price. Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory. The following transactions occur in February to May 2021. Feb. 2 16 25 30 31 Apr. 1 13 30 May 4 27 Natalie buys two deluxe mixers on account from Kzinski Supply Co. for $1,150 ($575 each), FOB destination, terms n/30. She sells one deluxe mixer for $1,100 cash. She pays the amount owed to Kzinski. She buys one deluxe mixer on account from Kzinski Supply Co. for $592, FOB destination, terms n/30. Natalie sells two deluxe mixers for a total of $2,200 cash. She pays the amount owed to Kzinski. She buys two deluxe mixers on account from Kzinski Supply Co. for $1,172 ($586 each), FOB destination, terms n/30. She sells three deluxe mixers for a total of $3,300 cash. Natalie pays the amount owed to Kzinski. She buys three deluxe mixers on account from Kzinski Supply Co. for $1,800 ($600 each), FOB destination, terms n/30. She sells one deluxe mixer for $1,100 cash.
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