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Touch Tronix, Inc

question 89

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Touch Tronix, Inc.sells component parts to Advanced Communications, Inc.a cell phone manufacturer.During December 10, 2011, Touch Tronix, Inc.sold €680,000 of goods to Advanced Communications, Inc.on account for €880,000.Advanced Communications, Inc.was dissatisfied with 25% of the merchandise it receives due to inferior quality.On December 21, 2011, Advanced Communications, Inc.returns the goods to Touch Tronix, Inc.for credit.Which of the following is true regarding the statement of financial position and the income statement for Touch Tronix, Inc.at December 31, 2011?


Definitions:

Job Order Costing

An accounting method used to track costs specifically associated with a particular job or order, important in manufacturing and production industries.

Movie Studio

A company that funds, produces, and distributes films, often also owning sound stages, equipment and employing staff for the creation of movies and television shows.

Materials Cost Per Unit

The total cost of materials divided by the number of units produced, indicating the material cost for each unit.

Average Cost Method

An inventory valuation method that calculates the cost of goods sold and ending inventory based on the average cost of all similar items in inventory.

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