Nuts-2-U Ltd Assuming the Relative Sales Value Method Is Used to Allocate

Essay

Nuts-2-U Ltd. purchased 1,000 bags of pecans at a total cost of $6,920. In addition, the company incurred $100 for transportation and grading. The pecans were graded as follows: $\begin{array} { | l | l | l | } \hline \text { Grade } & \text { Quantity } & \text { Current Market Price Per Bag } \\\hline \text { A } & 500 & \$ 12.00 \\\hline \text { B } & 150 & 10.00 \\\hline \text { C } & 300 & 4.00 \\\hline \text { Waste } & 50 & - 0 - \\\hline\end{array}$
Assuming the relative sales value method is used to allocate joint costs:
(a) Give the entry to record the purchase, assuming perpetual inventory records are kept. Include transportation and sorting costs in the entry. Show computations.
(b) Give the valuation of the ending inventory, assuming the following quantities on hand (show computations): $\begin{array} { | l | l | l | l | } \hline \text { Grade } & \text { Quantity on Hand } & \text { Unit Cost } & \text { Valuation } \\\hline \text { A } & 100 \text { bags } & \$ & \$ \\\hline \text { B } & 50 \text { bags } & \$ & \$ \\\hline \text { C } & 10 \text { bags } & \$ & \$ \\\hline\end{array}$
Total $