Ace Lawn Care Module 3 Mini Practice Problem In June, Jim decided to open a smal
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Question
Ace Lawn Care Module 3 Mini Practice Problem
In June, Jim decided to open a small retail operation selling bags of fertilizer to the public. He has decided to begin by offering two kinds of fertilizer. Below is the information for the month of June, 2014, for the two types of fertilizer.
Product
Selling Price
Feed All Fertilizer
$27.00
Weed and Feed All Fertilizer
$35.00
Purchase Data
Date
Product
Quantity (Bags)
Price per Bag
6/1/2014
Feed All Fertilizer
10
15.00
6/1/2014
Weed and Feed All Fertilizer
10
20.00
6/11/2014
Feed All Fertilizer
20
15.50
6/15/2014
Weed and Feed All Fertilizer
10
19.50
6/22/2014
Feed All Fertilizer
10
15.75
6/28/2014
Feed All Fertilizer
10
15.50
6/28/2014
Weed and Feed All Fertilizer
10
19.75
All purchases are paid in cash at the time of the purchase and Jim picks up the fertilizer from the distributor, so there is no freight charge.
Sales Data (summarized by week)
Date
Product
Quantity (Bags)
6/9/2014
Feed All Fertilizer
6
6/9/2014
Weed and Feed All Fertilizer
4
6/16/2014
Feed All Fertilizer
12
6/16/2014
Weed and Feed All Fertilizer
5
6/23/2014
Feed All Fertilizer
8
6/23/2014
Weed and Feed All Fertilizer
2
6/30/2014
Feed All Fertilizer
10
6/30/2014
Weed and Feed All Fertilizer
4
All sales are on credit.
In addition to the sales, on 6/20/14, a customer returned one bag of Feed All Fertilizer to Jim for credit on account.
Instructions:
Calculate the Cost of Goods Sold and the Ending Inventory values for the fertilizer products under 1) Average Cost, 2) First-In, First-Out(FIFO), and 3) Last-In, First-Out (LIFO). You will need to calculate ending inventory from the purchase, sale and return data given, you may assume that a physical count confirmed your calculation of the number of units in ending inventory.
Assume that Jim decides to use the FIFO method and compute the lower of cost or market (LCM) value to be reported for the end of June, 2014. Use the last purchase prices for the market value. You only need to calculate cost under the FIFO method for this comparison.
Prepare the Cost of Goods Sold section of the Income Statement.
I need assistance with the LCM & Income Statement. I really appreciate the help.
Product
Selling Price
Feed All Fertilizer
$27.00
Weed and Feed All Fertilizer
$35.00
1) Average Cost Sample of how to ?? out this page using Average Cost COST OF GOODS AVAILABLE FOR SALE Feed All Fertilizer COST OF GOODS AVAILABLE FOR SALE xxxxx Fertilizer Explanation Units Unit Cost Total Cost Unit Cost Total Cost $50.00 $5.10 127 50 5 177.50 Date Date Explanation Units 6V1 615 Purchase 6/29 Purchase 10 25 35 $5.00 20 6/22 6/20 Purchase Purchase Purchase Total $15.75 15.50 $15.45 $310 $150 S155 $772.50 Total 50 ENDING INVENTORY S 177.50 COST OF GOODS SOLD Cost of Goods Avallable for Sale Less Ending Inventory Cost of Goods Sold $5.07 177.50 S 55.77 $ 121.73 ENDING INVENTORY COST OF GOODS SOLD $15.45 $772.50 $231.75 $540.75 S772.50 50 Cost of Goods Avail for Sale Unit Cost Total Cost 11 5 5.07 $55.77 Units Unit Cost Total Co $15.45 $231.75 Less: Ending Inventory 15 Cost of Goods Sold Agood example is located in your e-text (lustra on 6-6) COST OF GOODS AVAILABLE FOR SALE Weed and Feed All Fertilizer Date Explanation Units Purchase Purchase Unit Cost Total Cost 61 6/15 /28 $20 $19.50 $19.75 $198 Total 30 $19.75 $692.60 ENDING INVENTORY COST OF GOODS SOLD 30 Cost of Goods Avail for Sale S592.50 Units Unit Cost Total Cost Less: Ending Invento S19.75$298.25 Cost of Goods Sold $296.26Explanation / Answer
Income statement All amount in dollar Date Purchase Sale Inventory Product type Quantity Rate per bag Amount Quantity Rate per bag Amount Quantity Rate per bag Amount 06/01/2014 Feed All Fertilizer 10 15 150 10 15 150 06/01/2014 Weed and Feed All Fertilizer 10 20 200 10 20 200 Total 350 350 06/09/2014 Feed All Fertilizer 6 27 162 4 15 60 06/09/2014 Weed and Feed All Fertilizer 4 35 140 6 20 120 Total 302 180 06/11/2014 Feed All Fertilizer 20 15.5 310 4 15 60 Feed All Fertilizer 6 20 120 Weed and Feed All Fertilizer 20 15.5 310 Total 490 06/15/2014 Feed All Fertilizer 10 19.5 195 4 15 60 Weed and Feed All Fertilizer 6 20 120 Feed All Fertilizer 20 15.5 310 Weed and Feed All Fertilizer 10 19.5 195 685 06/16/2014 Feed All Fertilizer 4 27 108 06/16/2014 Feed All Fertilizer 8 27 216 12 15.5 186 06/16/2014 Weed and Feed All Fertilizer 5 35 175 1 20 20 06/16/2014 Weed and Feed All Fertilizer 10 19.5 195 Total 499 401 06/22/2014 Feed All Fertilizer 10 15.75 157.5 12 15.5 186 Weed and Feed All Fertilizer 1 20 20 Weed and Feed All Fertilizer 10 19.5 195 Feed All Fertilizer 10 15.75 157.5 Total 558.5 06/23/2014 Feed All Fertilizer 8 27 216 4 15.5 62 Weed and Feed All Fertilizer 2 35 70 9 19.5 175.5 Feed All Fertilizer 10 15.75 157.5 Total 286 395 06/28/2014 Feed All Fertilizer 10 15.5 155 4 15.5 62 Weed and Feed All Fertilizer 10 19.75 197.5 9 19.5 175.5 Feed All Fertilizer 10 15.75 157.5 Feed All Fertilizer 10 15.5 155 Weed and Feed All Fertilizer 10 19.75 197.5 Total 352.5 747.5 06/30/2014 Feed All Fertilizer 4 27 108 4 15.5 62 Feed All Fertilizer 6 27 162 10 15.5 155 Weed and Feed All Fertilizer 4 35 140 5 19.5 97.5 Weed and Feed All Fertilizer 10 19.5 195 Total 410 509.5 Whole total 1365 1497 509.5 Under LCM 10 bags of Feed All Fertilizer will be valued at 15.50 and last purchase of 10 bags Weed and Feed All Fertilizer is valued at 19.50 Under LCM total value of inventory is $509.50 Income is sales + inventory - purchase = 1497 + 509.50 - 1365 = 641.50
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