Please help me to solve this problem Valuing Inventory and Recording Entries Using Relative Sales Value MethodAVC Inc. purchased 2,160 bags of pecans that cost $7,560. The company also incurred $540 for transportation and grading. The pecans graded out as follows.Grade Quantity (bags) Current Market Price per Bag720$6.75B1,0806.001804.50Waste180RequiredAssume the relative sales value method is used to allocate lump sum costs.Carry all decimals in calculations; round the final answer to the nearest dollar.a. Prepare the purchase entry assuming a perpetual inventory system.b. Determine the value of ending inventory assuming the following quantities are in inventory: grade A, 180 bags; grade B, 144 bags; and grade C, 72 bags.c. Prepare the entry for sale of 36 bags of grade A pecans at a market price of $6.75 cash per bag.Account NameDr.Cr.a. Inventory-Grade AInventory-Grade BInventory-Grade Cb. Inventory-Grade A $Inventory-Grade BInventory-Grade CTotalAccount NameDr.Cr.c CashInventoryCheck

Inventory valuation is very important and is generally done at the end of the accounting year. The…

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Business

Accounting

Valuing Inventory and Recording Entries Using Relative Sales Value Method

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter6: Inventories

Section: Chapter Questions

Problem 7PA: Retail method; gross profit method Selected data on inventory, purchases, and sales for Celebrity...

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Valuing Inventory and Recording Entries Using Relative Sales Value Method
AVC Inc. purchased 2,160 bags of pecans that cost $7,560. The company also incurred $540 for transportation and grading. The pecans graded out as follows.
Grade Quantity (bags) Current Market Price per Bag
720
$6.75
B
1,080
6.00
180
4.50
Waste
180
Required
Assume the relative sales value method is used to allocate lump sum costs.
Carry all decimals in calculations; round the final answer to the nearest dollar.
a. Prepare the purchase entry assuming a perpetual inventory system.
b. Determine the value of ending inventory assuming the following quantities are in inventory: grade A, 180 bags; grade B, 144 bags; and grade C, 72 bags.
c. Prepare the entry for sale of 36 bags of grade A pecans at a market price of $6.75 cash per bag.
Account Name
Dr.
Cr.
a. Inventory-Grade A
Inventory-Grade B
Inventory-Grade C
b. Inventory-Grade A $
Inventory-Grade B
Inventory-Grade C
Total
Account Name
Dr.
Cr.
c Cash
Inventory
Check

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