Question

  2.​Welcome Farms Ltd. uses IFRS and has an April 30year-end. Welcome Farms raises beef calves for market. Prepare journal entries for the following:

​On November 30, 2017, the farm purchased 20 calves at a total cost of $2,800. The farm capitalizes feed and labour costs incurred to look after the calves. These costs amount to $175per month.

Account name	Dr	Cr

On April 30, 2018, the calves had a fair value of $4,900. The farm estimated that the calves would mature on October 31, 2018 and that the company would transport the calves to market at an average cost of $50 per calf.

Account name	Dr	Cr

Answer 1

1.Calves A/c Dr 3675

To Cash/Bank A/c Cr 3675

(being calves purchased for $.2800 and feed,labour cost incurred $175*5 months)

2.

Cash/Bank A/c Dr.3900

To Calves A/c Cr. 3675

To Loss on Sale of Calves A/c Cr .225

(being calves sold for $3900 net of transport cost $1000,loss incurred $225)

*Cash or bank account can be used depending on mode of payment at the time of purchase and at the time of sale of cales in the market.

*Net bank/cash received on sale=4900 less transport cost incurred 1000

Transport Cost =20calves *$50 per calve=1000