The Wizz Electronics sells a variety of electronic devices including a variety of WIFI SMART camera bulbs. The business began the second quarter (April to June) of 2022 with 15 (V380PRO) camera bulbs at a total cost of $108,750. The following transactions relating to the “V380PRO” camera bulbs were completed during the quarter. April 7 90 bulbs were purchased at a cost of $6,850 each. In addition, the business paid freight charges of $800 cash on each bulb to have the inventory shipped from the point of purchase to their warehouse. April 30 The sales for April were 75 bulbs which yielded total sales revenue of $803,250. (15 of these bulbs were sold on account to two longstanding customers of the business) May 6 A new batch of 80 bulbs was purchased at a total cost of $654,800 May 9 Upon inspection of the inventory purchased on May 6, five (5) of the bulbs were found to be defective and were returned to the supplier. May 31 During the month 62 of the camera bulbs were sold at a price of $11,450 each. June 5 A customer, to whom 7 of the bulbs were sold during the first business day of May, returned 3 units of the merchandise, as they were of another make & model. June 14 Owing to an increased demand, a further 110 bulbs were purchased at a cost of $9,000 each; the supplier gave a 3% quantity discount on the purchase. June 30 116 bulbs were sold during June at a unit selling price of $12,250. June 30 An actual count of inventory was carried out at the close of business which revealed that there were 36 units of the V380PRO brand of merchandise in the store room. Unless otherwise stated, assume that all purchases were on account and received on the dates stated. Required: (A) Prepare a perpetual inventory record for this merchandise, using the first in, first out (FIFO) method of inventory valuation to determine the company’s cost of goods sold for the quarter and the value of ending. (B) Given that selling, distribution and administrative costs associated with the V380PRO brand of WIFI SMART camera bulbs for the quarter were $27,255, $42,400, and $140,600 respectively, prepare an income statement for The Wizz (V380PRO) for the quarter ended June 30, 2022. (C) Journalize the transactions for the month of April, assuming the company uses a: - Periodic inventory system - Perpetual inventory system
The Wizz Electronics sells a variety of electronic devices including a variety of WIFI SMART camera
bulbs. The business began the second quarter (April to June) of 2022 with 15 (V380PRO) camera bulbs
at a total cost of $108,750. The following transactions relating to the “V380PRO” camera bulbs were
completed during the quarter.
April 7 90 bulbs were purchased at a cost of $6,850 each. In addition, the business paid freight
charges of $800 cash on each bulb to have the inventory shipped from the point of
purchase to their warehouse.
April 30 The sales for April were 75 bulbs which yielded total sales revenue of $803,250. (15 of
these bulbs were sold on account to two longstanding customers of the business)
May 6 A new batch of 80 bulbs was purchased at a total cost of $654,800
May 9 Upon inspection of the inventory purchased on May 6, five (5) of the bulbs were found to
be defective and were returned to the supplier.
May 31 During the month 62 of the camera bulbs were sold at a price of $11,450 each.
June 5 A customer, to whom 7 of the bulbs were sold during the first business day of May,
returned 3 units of the merchandise, as they were of another make & model.
June 14 Owing to an increased demand, a further 110 bulbs were purchased at a cost of $9,000
each; the supplier gave a 3% quantity discount on the purchase.
June 30 116 bulbs were sold during June at a unit selling price of $12,250.
June 30 An actual count of inventory was carried out at the close of business which revealed that
there were 36 units of the V380PRO brand of merchandise in the store room.
Unless otherwise stated, assume that all purchases were on
Required:
(A) Prepare a perpetual inventory record for this merchandise, using the first in, first out (FIFO)
method of
the value of ending.
(B) Given that selling, distribution and administrative costs associated with the V380PRO brand of
WIFI SMART camera bulbs for the quarter were $27,255, $42,400, and $140,600 respectively,
prepare an income statement for The Wizz (V380PRO) for the quarter ended June 30, 2022.
(C) Journalize the transactions for the month of April, assuming the company uses a:
- Periodic inventory system
- Perpetual inventory system
(D) Buckley Enterprise sells a product that cost $450 per unit and has a monthly demand of 5,000
units. The annual holding cost per unit is calculated as 5% of the unit purchase price. It costs the
business $75 to place a single order. Currently the business places 12 orders each year.
i) What is the total stock administrative cost of Buckley’s current inventory policy?
ii) Is this the entity’s cost minimizing solution for this product each year? Explain.
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