Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

In 2007, the Trinity Company purchased from John the right to be the individual distributor in the western states of product called Halenol.  In payment, Trinity agreed to pay John 20% of gross profit identified from sale of Halenol in 2009.

Trinity uses a periodic inventory system and the LIFO inventory method.  Late in 2008, the information is given below about the Halenol inventory:

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, the purchase price of Halenol had risen to $40 per unit.  On December 28, 2009, three days before year-end, Trinity is in the position to purchase 20,000 extra units at the $40 per unit price.  Supplier guarantees the units will leave its warehouse on December 30, FOB (free on board) shipping point, and will take 3 days to reach Trinity’s warehouse.  Due to market demand for Halenol, Trinity can easily pass on increased cost to its customers by raising its prices in 2009 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. The company does not expect the purchase price of Halenol to change during 2009.

problems:

1) Find out the effect of purchase of extra 20,000 units of Halenol and the payment due John.

2) describe briefly the ethical dilemma which Trinity faces in deciding whether to purchase the extra units or not.

3) prepare a suggestion as to how Trinity and John could have written a contract to avoid this ethical dilemma.

4) What does FOB shipping point mean to Trinity’s inventory records?  What will be the effect if shipment was FOB destination?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M99686

Have any Question? 


Related Questions in Accounting Basics

Business assignmentthe comany i have choosen is upsresearch

Business Assignment The comany i have choosen is UPS. Research a company that interests you from the Fortune 500. (A list will be provided). Analyze what they do. What business are they in? What industry? How have they b ...

Assignment accounting qualitybased on the requirements of

Assignment: Accounting Quality Based on the requirements of the Sarbanes-Oxley Act and SEC reporting requirements for publically traded companies, Write a five page paper in which you: 1. Assess the roles of the Board of ...

Final paperwrite a five- to seven-page financial statement

Final Paper Write a five- to seven-page financial statement analysis of a public company, formatted according to APA style as outlined in the Ashford Writing Center. In this analysis, you will discuss the financial healt ...

Your city has decided to build a new library the projected

Your city has decided to build a new library. The projected cost is $2 million. A bond issue for $1.2 million has been authorized, and the remainder is supposed to come from a contribution of $800,000 from the general fu ...

Focus of the final paperyouve just been hired onto abc

Focus of the Final Paper You've just been hired onto ABC Company as the corporate controller. ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles. The company currently has an ...

Assignmentbackgroundyou are an audit senior for burns amp

Assignment Background You are an audit senior for Burns & Allen, LLP. One of the audit partners received a call from Brenda Parker, CFO of a publicly traded client, Toys For U ("Toys"). Toys is a retailer with 25 locatio ...

What went wrongfriends bank is seeking to hire a new teller

What Went Wrong? Friend's Bank is seeking to hire a new teller. Darrell has applied for the position. His application states that five years ago, he was convicted for embezzlement as a teller. In the interview, Darrell r ...

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 1which entry would record the payment of a utility

Question 1 Which entry would record the payment of a utility bill? A. Debit Utilities Expense; credit Cash B. Debit Cash; credit Utilities Expense C. Debit Utilities Expense; credit Accounts Payable D. Debit Accounts Rec ...

1 the objective of a firms management should be to only

1. The objective of a firm's management should be to only undertake the projects that ________ the market value of shareholders' equity. a. decrease b. increase c. do not change d. provide zero change to e. none of the a ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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