Question Details

Prepare the journal entry to record the sale of the grapes harvested 



Ex. 1—Retail Inventory Method.
Presented below is information related to Kuchinsky Company.
						      Cost      		       Retail	
		Beginning inventory 		€   280,000		   €   390,000
		Purchases			  1,820,000		     3,000,000
		Markups						        130,000
		Markup cancellations					          20,000
		Markdowns						          47,000
		Markdown cancellations				            7,000
		Sales							     3,150,000

Instructions
Compute the inventory by the conventional retail inventory method.


Pr. 2—Valuation at net realizable value.
Reed Mangus purchased the Hillside Vineyard at an estate auction in April 2010 for €1,250,000. The purchase was risky because the growing season was coming to an end, the grapes must be harvested in the next several weeks, and Reed has limited experience in carrying off a grape harvest.
	At the end of the first quarter of operations, Reed is feeling pretty good about his early results. The first harvest was a success; 500 bushels of grapes were harvested with a value of €50,000 (based on current local commodity prices at the time of harvest). And, given the strong yield from area vineyards during this season, the net realizable value of Reed- vineyard has increased by €25,000 at the end of the quarter. After storing the grapes for a short period of time, Reed was able to sell the entire harvest for €60,000.

Instructions
	(a)	Prepare the journal entries for the Hillside biological asset (grape vines) for the first quarter of operations (the beginning carrying and net realizable value is 1,250).
	(b)	Prepare the journal entry for the grapes harvested during the first quarter.
	(c)	Prepare the journal entry to record the sale of the grapes harvested in the first quarter.
	(d)	Determine the total effect on income for the quarter related to the Hillside biological asset and agricultural produce.



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