[go: up one dir, main page]
Scribd
Upload
37 views1 page

Big Oak Lumber Is A Lumber Yard On Angel Island

Big Oak Lumber is a lumber yard located on Angel Island. During the current year, Big Oak sold lumber to Hard Hat Construction for $19,700 and purchased lumber from LHP Company for $3,700. In December, Big Oak's physical inventory count was $114,000, but the accounting records showed $116,500. Big Oak's auditors confirmed the physical count was correct.

Uploaded by

trilocksp Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
37 views1 page

Big Oak Lumber Is A Lumber Yard On Angel Island

Big Oak Lumber is a lumber yard located on Angel Island. During the current year, Big Oak sold lumber to Hard Hat Construction for $19,700 and purchased lumber from LHP Company for $3,700. In December, Big Oak's physical inventory count was $114,000, but the accounting records showed $116,500. Big Oak's auditors confirmed the physical count was correct.

Uploaded by

trilocksp Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 1

Big Oak Lumber is a lumber yard on Angel Island

Big Oak Lumber is a lumber yard on Angel Island. Some of Big Oak’s transactions during the
current year are as follows:Apr. 15 Sold lumber on account to Hard Hat Construction, $19,700.
The inventory subsidiary ledger shows the cost of this merchandise was $10,300.Apr. 19
Purchased lumber on account from LHP Company, $3,700.May 10 Collected in cash the
$19,700 account receivable from Hard Hat Construction.May 19 Paid the $3,700 owed to LHP
Company.Dec. 31 Big Oak’s personnel counted the inventory on hand and determined its cost
to be $114,000. The accounting records, however, indicate inventory of $116,500 and a cost of
goods sold of $721,000. The physical count of the inventory was observed by the company’s
auditors and is considered correct.Instructionsa. Prepare journal entries to record these
transactions and events in the accounting records of Big Oak Lumber. (The company uses a
perpetual inventory system.)b. Prepare a partial income statement showing the company’s
gross profit for the year. (Net sales for the year amount to $1,422,000.)c. Big Oak purchases
merchandise inventory at the same wholesale prices as other lumber yards. Because of its
remote location the company must pay between $8,000 and $18,000 per year in extra
transportation charges to receive delivery of merchandise. (These additional charges are
included in the amount shown as cost of goods sold.)Assume that an index of key business
ratios in your library shows lumber yards of Big Oak’s approximate size (in total assets)
average net sales of $1 million per year and a gross profit rate of 22 percent. Is Big Oak able to
pass its extra transportation costs on to its customers? Does the business appear to suffer or
benefit financially from its remote location? Explain your reasoning and support your
conclusions with specific accounting data comparing the operations of Big Oak Lumber with the
industry averages.View Solution:
Big Oak Lumber is a lumber yard on Angel Island
SOLUTION-- http://solutiondone.online/downloads/big-oak-lumber-is-a-lumber-yard-on-angel-
island/

Unlock answers here solutiondone.online


Powered by TCPDF (www.tcpdf.org)

You might also like