In: Accounting
Yarn Imports Corp. is preparing an inventory listing, and is assigning a cost to inventory that arrived on December 29, two days before the end of the year. The following elements of potential cost have been identified:
Invoice price; the amount was prepaid when the goods were ordered because the supplier offered a 5% discount for payment up front. Goods were custom-manufactured for Yarn after the order date.
The invoice price was for $38,000, less 5%
HST on invoice price, $5,415
Interest on borrowed money between the time the deposit was paid and the goods were delivered, $510
Delivery charges, paid by the supplier, $1,100
Required:
Calculate the value to include in inventory of Yarn Imports Corp.
Cost |
|
Invoice price; the amount was prepaid when the goods were ordered because the supplier offered a 5% discount for payment up front. The invoice price was for $38,000, less 5% (Cost is net of discount) |
$36,100 |
HST on invoice price, $5,415 (Value added tax; refundable) |
-- |
Interest on borrowed money between the time the deposit was paid and the goods were delivered, $510 (Goods were customized after the order date and qualify for interest capitalization) |
510 |
Delivery charges, paid by the supplier, $1,100 (Paid by supplier) |
-- |
$36,610 |