Ravenna Candles recently purchased candleholders for resale in its shops. Which of the following costs would be part of the cost of the candleholder inventory? a. Advertising costs b. Freight in c. Freight out d. Purchasing agent wages
Ravenna Candles recently purchased candleholders for resale in its shops. Which of the following costs would be part of the cost of the candleholder inventory? a. Advertising costs b. Freight in c. Freight out d. Purchasing agent wages
Ravenna Candles recently purchased candleholders for resale in its shops. Which of the following costs would be part of the cost of the candleholder inventory?
a. Advertising costs
b. Freight in
c. Freight out
d. Purchasing agent wages
Expert Solution & Answer
To determine
Determine from the following which cost is included in the cost of inventory.
Answer to Problem 1QC
Option: (b) Freight in
Explanation of Solution
Inventory costs:
Inventory costs are the costs which are related with the obtaining, storage and management of inventory, it includes ordering costs and carrying costs.
(a) Advertising costs are costs which are included in the advertisement expenses.
(b) Freight in is a cost which incurred at the time of purchase of inventory. Hence it is included in the cost of inventory.
(c) Freight out is a cost which incurred at the time of sale of inventory. Hence, it is included in the sales related expenses.
(d) Purchasing agent wages are expenses which are included in the wages and salaries expenses
Hence, option (b) Freight in is the correct answer.
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An ARO is to be calcualted for the Leashold improvement made in 2024. The book life given is 10 years (based on the lease) and it is Straight line depreciation.What are the amounts to capitalize and ARO when the given info is
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Comparative Balance Sheet
Assets Dec. 31, 2025
Dec. 31, 2024
Cash
$33,900
$12,500
Accounts receivable
17,500
14,500
Inventory
Prepaid insurance
Stock investments
26,400
19,200
8,500
10,000
-0-
15,700
Equipment
Accumulated depreciation-equipment
Total assets
88,000
44,000
(15,500)
(14,800)
$158,800
$101,100
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Accounts payable
$34,700
$7,900
Bonds payable
37,000
49,400
Common stock
40,400
24,300
Retained earnings
46,700
19,500
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$158,800
$101,100
Additional information:
1
Net income for the year ending December 31, 2025 was $36,000.
2
Cash dividends of $8,800 were declared and paid during the year.
3.
Stock investments that had a book value of $15,700 were sold for $12,000.
4.
Sales for 2025 are $150,000.
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