When a Mercator manufacturing Inc. checked its stores, it had the following inventory on hand as at December 31, 2020: I) 5,000 litres of lubricating oil that had cost $2.50 per litre: As at December 31, the selling price was $3.0 per litre. II) 50,000 kg of steel that had cost $0.50 per kg: As at December 31, the market price was $0.48 per kg III) spare parts that had cost $25,000: Mostly for production machinery that was no longer in use, so it was unlikely they could be used. They have no resale value IV) A replacement control unit for a customer's milling machine, which has a resale value of $10,000: The control unit was bought by the customer so that the Mercator could use it to repair their milling machine V) $20,000 of electronic parts that were in good working order but had gone beyond their "sell by" dates on the packages Required a) Show how the inventory would appear in the balance sheet as at December 31, 2020 b) If Mercator manufacturing sales for 2020 totalled $500,000, calculate the inventory turnover ratio and the inventory holding period
When a Mercator manufacturing Inc. checked its stores, it had the following inventory on hand as at December 31, 2020: I) 5,000 litres of lubricating oil that had cost $2.50 per litre: As at December 31, the selling price was $3.0 per litre. II) 50,000 kg of steel that had cost $0.50 per kg: As at December 31, the market price was $0.48 per kg III) spare parts that had cost $25,000: Mostly for production machinery that was no longer in use, so it was unlikely they could be used. They have no resale value IV) A replacement control unit for a customer's milling machine, which has a resale value of $10,000: The control unit was bought by the customer so that the Mercator could use it to repair their milling machine V) $20,000 of electronic parts that were in good working order but had gone beyond their "sell by" dates on the packages Required a) Show how the inventory would appear in the balance sheet as at December 31, 2020 b) If Mercator manufacturing sales for 2020 totalled $500,000, calculate the inventory turnover ratio and the inventory holding period
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
When a Mercator manufacturing Inc. checked its stores, it had the following inventory on hand as at December 31, 2020:
I) 5,000 litres of lubricating oil that had cost $2.50 per litre: As at December 31, the selling price was $3.0 per litre.
II) 50,000 kg of steel that had cost $0.50 per kg: As at December 31, the market price was $0.48 per kg
III) spare parts that had cost $25,000: Mostly for production machinery that was no longer in use, so it was unlikely they could be used. They have no resale value
IV) A replacement control unit for a customer's milling machine, which has a resale value of $10,000: The control unit was bought by the customer so that the Mercator could use it to repair their milling machine
V) $20,000 of electronic parts that were in good working order but had gone beyond their "sell by" dates on the packages
Required
a) Show how the inventory would appear in the balance sheet as at December 31, 2020
b) If Mercator manufacturing sales for 2020 totalled $500,000, calculate the inventory turnover ratio and the inventory holding period
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