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Recognizing revenue for goods shipped out to

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Unformatted text preview: evenue for goods shipped out to distributors under agreements allowing price protection and/or right of return on merchandise unsold by the distributors. None of the above 2 ACCT201 Q4. 10,000 units of raw material “A” which are used to make a finished product “F” were purchased at a cost $20 per unit by Innovation Ltd. The costs to complete the raw materials into finished goods are as follows: Labour Factory overheads $12 $8 The estimated selling price of the finished product “F” is $ 55 per unit and commission of half of one percent based on sales price is payable for every unit sold. If the current replacement cost of raw material “A” falls to $17 per unit, Innovation Ltd should a. b. c. d. Write down the cost of raw material “A” to $17 per unit Write down the cost of raw material “A” to $15 per unit Leave the cost of raw material “A” at $20 per unit None of the above Q5. Oakwell Plastics Company incurred the following transactions in the year 2002 in connection with their new plant facility: Purchase price of land Legal fees on land purchase Architect fees Cost to demolish old building Cost to drainage around the new building Cost of air-conditioning unit Cost to construct new building $5,500,000 25,000 100,000 55,000 10,000 20,000 4,500,000 What amounts should be reported in Oakwell’s 31 December 2002 balance sheet...
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