Raleigh Co. has the following products in its ending inventory. Compute the lowe

Question

Raleigh Co. has the following products in its ending inventory. Compute the lower of cost or market total for inventory applied separately to each product. Quantity Cost per Market per unit Product Jelly Jam Marmalade 150 370 260 $2.00 $2.65 $3.10 2.15 2.50 3.05 29) A) $2,018.00. B) $2,086.50. C) $2,109.00. D) $2,040.50 E) $2,053.50. 30) A debit to Sales Returns and Allowances and a credit to Accounts Receivable: A) Recognizes that a customer returned merchandise and/or received an allowance. B) Reflects a decrease in amount due to a supplier. C) Reflects an increase in amount due from a customer. D) Is recorded when a customer takes a discount. E) Records the cost side of a sales return. 30)

Explanation / Answer

Inventory will always apply on the lower value. (Between cost and market value)

So ending inventory = 150*2 + 370*2.5 + 260*3.05

                                     = 300+ 925 + 793

                                     = 2018

So correct answer is A

When the customer return the goods, which were sold to him earlier on account.

Sales being revenue account was credited and account receivable account was debited.

Now when the customer is returning the goods, Dr entry will be made to sales return and allowances and Cr entry will be made to the account receivable account to reduce the account receivable.

So correct answer is A.

Sales is a revenue account, while sales discount and sales return is an expense account so

Net sales = Total sales – return – discount

= 135000 – 2000 – 3200

= 129800

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