Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) In 2008, McQueen Company bought from Chris Padgett the right to be sole distributor in western states of product called Halenol.  In payment, McQueen agreed to pay Padgett 20% of gross profit recognized from sale of Halenol in 2009.

McQueen utilizes periodic inventory system and LIFO inventory method.  Late in 2009, information available about Halenol inventory is given below:

Beginning inventory, 1/1/09 (10,000 units @ $30)

$300,000

Purchases (40,000 units @ $30)

1,200,000

Sales (35,000 units @ $60)

2,100,000

By the end of year, buying price of Halenol had risen to $40 per unit.  On December 28, 2009, three days before year-end, McQueen is in position to buy 20,000 extra units at the $40 per unit price.  Supplier guarantees units will leave its warehouse on December 30, FOB (free on board) shipping point, and will take 3 days to reach McQueen's warehouse.  Due to market demand for Halenol, McQueen can simply pass on increased cost to its customers by increasing its prices in 2010 to $80 per unit.  Inventory on hand at December 28 is 15,000 units and is enough to meet sales demand for next 6 months. Company does not expect purchase price of Halenol to change during 2010.

a. Find out effect of purchase of extra 20,000 units of Halenol and payment due Chris Padgett.

b. describe briefly ethical dilemma that McQueen faces in deciding whether or not to buy extra units.

c. prepare suggestion as to how McQueen and Padgett could have written contract to avoid this ethical dilemma.

d. What does FOB shipping point mean to McQueen's inventory records?  What would be the effect if shipment was FOB destination?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M916906

Have any Question? 


Related Questions in Accounting Basics

Write a 600-800 word memo to your accounting committee on

Write a 600-800 word memo to your accounting committee on fraud detection discussing the 6 steps of the Proactive Method of Fraud Detection found in figure 6.1 of Chapter 6. Include methods to gather information about a ...

Assignmentpart iexplain what you learn about the

Assignment PART I Explain what you learn about the disclosures of your SEC 10-K company relating to Income Taxes. Your comments should relate to net income or loss as well as to the balance sheet treatment and disclosure ...

Capital budgeting analyzing project cash flows alexandria

Capital Budgeting: Analyzing Project Cash Flows (Alexandria Chemical Products Company) In early 1980s Alexandria Chemical Products started as a small firm between two friends to produce detergent products. By the end of ...

Accounting assignmentaccounting is the study of how

Accounting Assignment Accounting is the study of how businesses track their income and assets over time. Accountants engage in a wide variety of activities in addition to preparing financial statements and recording busi ...

Harmon helmets purchased equipment for 62000 cash sold

Harmon Helmets purchased equipment for $62,000 cash, sold equipment costing $36,000 with a book value of $22,000 at a loss, and declared dividends during 2013. No new notes payable were issued during the year. Financial ...

Accounting anonymousabsorption and variable costing please

Accounting Anonymous Absorption and Variable Costing: Please respond to one of the following: Option 1 Create a situation for determining performance evaluations and bonuses where absorption-costing operating income is u ...

1 as a small business owner in todays economy what three

1. As a small business owner in today's economy, what three financial reports would you use on a regular basis? What information would you find on each statement? What decisions might each statement help you make? Please ...

Assignemntpart 11the type of business organization that can

Assignemnt Part 1 1. The type of business organization that can continue indefinitely is known as a: a. sole proprietorship. b. partnership. c. corporation. d. None of the above answers are correct. 2. The purpose of the ...

1 the manufacture of herbal health tonic is a competitive

1. The manufacture of herbal health tonic is a competitive industry. The manufacturing facilities have an annual output of 100,000 gallons. Operating costs are $2 per gallon. A 100,000 gallon capacity plant costs $500,00 ...

Question 1under the allowance method bad debt expense is

Question 1 Under the allowance method, Bad Debt Expense is recorded A. as an estimate. B. when an individual account is written off. C. several times during the year as needed. D. None of the above Question 2 Which amoun ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen