What amount should the rods be reported

Assignment Help Accounting Basics

Reference no: EM132704631

Question - Pumicestone Ltd sells a range of fishing equipment including rods, reels, hooks, lines and sinkers through its website. On 1 January 2020, the company purchased 1,000 units of a particular model of fishing rod from Rods R Us Ltd and the following costs were incurred in relation to the purchase:

Purchase price from supplier $72,500

Federal import taxes $8,750

Freight costs to deliver to company's warehouse $6,500

Modification costs prior to sale $11,500

Cost of radio and fishing magazine advertising $8,600

Expected costs of delivery of rods to customers $15,900

Unfortunately, this particular model of fishing rod is not very popular with fishermen and the company still has 950 of the rods left on hand on 30 June 2020. One of the company's competitors has offered to purchase these rods in July 2020 for $105 per rod. As part of the sale agreement, Pumicestone Ltd would incur $6,250 of freight costs to deliver the rods to the competitor.

Required -

(a) Calculate the total cost of the 1,000 fishing rods purchased on 1 January 2020. (Show your calculations to support your answer).

(b) What amount should the 950 rods be reported in the balance sheet as inventory as at 30 June 2020? Explain your answer, including any necessary calculations. (Note: The total cost of these rods should be calculated as a proportion of the total cost of the 1,000 rods calculated in part (a)).

Reference no: EM132704631

Questions Cloud

Mechanism of action for the three lines of defense : This week you will provide a written response that analyzes the mechanism of action for the three lines of defense in the immune system.

Identify the components of hmis in brief : An effective digital health ecosystem relies on a broad spectrum of technical, clinical, and administrative stakeholders to gather and analyze patient data.

List one way fever suppresses infections : How does fever exert antimicrobial effects on the bacteria itself? List one way fever suppresses infections.

Pathogenicity of human pathogen : Briefly explain how this yellow colored bacterial pigment can contribute to increased pathogenicity of this human pathogen.

What amount should the rods be reported : What amount should the 950 rods be reported in the balance sheet as inventory as at 30 June 2020? Explain your answer, including any necessary calculations

Application of an antibacterial drug cause : Does the application of an antibacterial drug cause a bacterial cell to become resistant?

Prevent the growth of the microorganism : To control microbial organism is a better idea to prevent the growth of the microorganism, the control of microbial organism

Explanatory and predictive power : Select the theory that you believe has the explanatory and predictive power regarding the confrontation between the United States and Iran

Write about your understanding of consent : Write about your understanding of consent and. Did this understanding change after watching the videos?how so? please explain. The response must be typed.

User Account

All Pages