80.2K

Verified Solution

Link Copied!

Section I: Statement of Cash Flows (60 points)

Future Carnivores, Inc. sells vegan meals-ready-to-eat (MREs) to campers and disaster preppers. The MREs heat themselves up with environmentally-friendly chemical reactions and can be prepared without a stove or other equipment. The MREs have no expiration date and provide a healthy, satisfying, meat-free meal in any environment.

Record the journal entries associated with the events below.

Assume that Future Carnivores, Inc. begins March 2018 with 3,600 MREs in its inventory. Future Carnivores, Inc. purchased 1,200 of these MREs on January 11, 2018, for $7.52 each. The rest were purchased on February 2, 2018, for $7.81 each.

1) On March 9, 2018, Future Carnivores Inc. receives 4,400 MREs and pays $8.13 cash for each MRE.

2) On March 16, 2018, Future Carnivores, Inc. receives 1,800 MREs that it purchased on account for $8.37 each from a higher-cost supplier to determine if there was a noticeable difference in quality. Since none of the taste-tester noticed a difference, Future Carnivores, Inc. plans to source all of its MREs from another cheaper supplier.

3) On March 24, 2018, Future Carnivores, Inc. pays $15,066 for the MREs it received on March 16.

4) During the month of March 2018, Future Carnivores, Inc. sells an additional 6,500 MREs for a total of $128,375. Of the total sales, 32% are on account; the rest are cash.

5) On April 1, 2018, Future Carnivores, Inc. pays $68,000 for warehouse shelving to store the MREs when they are finally delivered. The operations managers at Future Carnivores, Inc. told the purchaser that the employees at her prior company used this brand of shelving for 15 years before selling it for $1,340 to a scrap metal dealer.

6) On December 31, 2018, the accountant for Future Carnivores, Inc. records the adjusting entry for depreciation on the warehouse shelving purchased on April 1, 2018.

7) On December 31, 2019, the accountant for Future Carnivores, Inc. records the adjusting entry for depreciation on the warehouse shelving purchased on April 1, 2018.

8) On January 1, 2020, the operations manager for Future Carnivores, Inc. provides the accountant with a new estimate of the useful life for the warehouse shelving. Since the shelving is handling the wear and tear from the warehouse workers better than expected, she thinks the warehouse shelving will last for 18 more years (19.75 years in total). Based on changes in the price of metals, the accountant estimates that the residual value of the shelving will be $823. What adjusting journal entry for depreciation will the accountant record on December 31, 2020?

9) On August 31, 2030, Future Carnivores, Inc. expands to a new larger warehouse. The new lessee of the smaller warehouse agrees to purchase the warehouse shelving from Future Carnivores, Inc. for $22,500.

Answer & Explanation Solved by verified expert

See Answer