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Valuing Inventory and Recording Entries Using Relative Sales Value Method

Valuing Inventory and Recording Entries Using Relative Sales Value Method

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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Valuing Inventory and Recording Entries Using Relative Sales Value Method AVC Inc. purchased 2,160 bags of pecans that cost $7,560. The company also incurred $540 for transportation and grading. The pecans graded out as follows. Grade Quantity (bags) Current Market Price per Bag 720 $6.75 B 1,080 6.00 180 4.50 Waste 180 Required Assume the relative sales value method is used to allocate lump sum costs. Carry all decimals in calculations; round the final answer to the nearest dollar. a. Prepare the purchase entry assuming a perpetual inventory system. b. Determine the value of ending inventory assuming the following quantities are in inventory: grade A, 180 bags; grade B, 144 bags; and grade C, 72 bags. c. Prepare the entry for sale of 36 bags of grade A pecans at a market price of $6.75 cash per bag. Account Name Dr. Cr. a. Inventory-Grade A Inventory-Grade B Inventory-Grade C b. Inventory-Grade A $ Inventory-Grade B Inventory-Grade C Total Account Name Dr. Cr. c Cash Inventory Check
Transcribed Image Text:Valuing Inventory and Recording Entries Using Relative Sales Value Method AVC Inc. purchased 2,160 bags of pecans that cost $7,560. The company also incurred $540 for transportation and grading. The pecans graded out as follows. Grade Quantity (bags) Current Market Price per Bag 720 $6.75 B 1,080 6.00 180 4.50 Waste 180 Required Assume the relative sales value method is used to allocate lump sum costs. Carry all decimals in calculations; round the final answer to the nearest dollar. a. Prepare the purchase entry assuming a perpetual inventory system. b. Determine the value of ending inventory assuming the following quantities are in inventory: grade A, 180 bags; grade B, 144 bags; and grade C, 72 bags. c. Prepare the entry for sale of 36 bags of grade A pecans at a market price of $6.75 cash per bag. Account Name Dr. Cr. a. Inventory-Grade A Inventory-Grade B Inventory-Grade C b. Inventory-Grade A $ Inventory-Grade B Inventory-Grade C Total Account Name Dr. Cr. c Cash Inventory Check
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