Use the following information for the following questions:
On April 1, Heavy Metal Corp. consigned 50 handcrafted benches to Disco Co. Heavy Metal’s cost was $ 350 per bench. Total freight costs were $ 700, which were paid by Disco. On August 1, Heavy Metal received a cheque for $ 14,100 from Disco which included the following information:
Number of units sold:..............................20
Expenses deducted:
Freight:..........................................................$\$ 700$
Commission (20\% of sales price)...............?
Advertising..................................................$\$ 450$
Delivery.......................................................$\$ 290$
-The inventory of benches will be reported on whose statement of financial position and at what amount?
A) Heavy Metal's statement of financial position, $ 10,500
B) Heavy Metal's statement of financial position, $ 10,920
C) Disco's statement of financial position $ 10,500
D) Disco's statement of financial position, $ 10,920

Question

Quizplus · Accepted Answer

The number of benches sold = 20 Therefore, the number of benches still in inventory = 50 - 20 = 30. 
Total cost of 50 benches = 50 × $ 350 = $ 17,500
Cost of 30 benches still in inventory = 30 × $ 350 = $10,500 (to be reported on Heavy Metal's statement of financial position)
Commission on 20 benches = 20 × Sales price × 20% = 20 × (14100 − 700 − 450 − 290) × 20% = $ 2,352 
Therefore, the expenses deducted by Disco = $ 700 + $ 450 + $ 290 + $ 2,352 = $ 3,792
The revenue recognized by Heavy Metal = $ 14,100 − $ 3,792 = $ 10,308 
The revenue recognized by Heavy Metal for selling 20 benches = $ 10,308 i.e. the sales price of 20 benches was $ 10,308. Therefore, the selling price of each bench = $ 10,308 ÷ 20 = $515.4 
Therefore, the total value of 30 benches in inventory = 30 × $ 515.4 = $ 15,462 (to be reported on Heavy Metal's statement of financial position)

Hence, the inventory of benches will be reported on Heavy Metal's statement of financial position and at the amount of $ 10,920.

Use the Following Information for the Following Questions: on April $700\$ 700$700

Use the Following Information for the Following Questions:
on April $\$ 700$