Question

Rapco Cable Company shipped 10,000 specialty cables at a cost of $3.50 each to the Electronic Air Navigation Supply Company. The cables were shipped on November 1, 2017 on consignment. Rapco incurred $400 of freight related costs in sending the cables to Electronic Air Navigation Supply.

The consignment agreement requires Electronic Air Navigation Supply to sell cables for $6.00 each to customers only within the 5 states of California, Nevada, Oregon, Washington and Utah.

Rapco pays a 15% commission to Electronic Air Navigation for cables sold and allows a monthly advertising allowance of $300.

The agreement also requires Electronic Air Navigation to submit an accounting at the end of each month showing the sales for the month and the inventory still on hand at month-end. In addition to submitting the report, Electronic Air Navigation Supply is required to remit full payment to Rapco for all cables sold, less commissions and monthly advertising allowance.

The report received from Electronic Air Navigation Supply for the month of November indicated the following.

Cables Sold 4,200Cables on Hand 5,800

Required:

a. Prepare a detailed calculation showing the value of Rapco’s consignment inventory at November 30^th.

b. Prepare a detailed calculation of Rapco’s profit on its consignment inventory for the month of November.

c. Prepare a detailed calculation of the amount of cash Rapco is to receive from Electronic Air Navigation Supply for November.

d. Reconcile Rapco’s cash to be received to its net profit.

Answer 1

The solution has been broken down into 4 subparts with detailed calcuations as following. Kindly go through each & every subparts thoroughly as all of them are interlinked.