ABHAY CoPrepares Monthly Income Statements

question 104

Essay

ABHAY Co.prepares monthly income statements.Inventory is counted only at year end;thus,month-end inventories must be estimated.All sales are made on account.The rate of mark-up on cost is 25%.The following information relates to the month of June.

Instructions
Calculate the estimated cost of the inventory on June 30.

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Definitions:

Private Corporation

A privately-owned company where ownership is either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately.

Authorized Shares

The total number of shares that a corporation is legally allowed to issue, as specified in its articles of incorporation.

Subscribed

Term used to describe the commitment by investors or customers to purchase or subscribe to a company's stocks, services, or publications.

Preemptive Right

The right of existing shareholders to purchase additional shares of new stock before it is offered to the public to maintain their proportional ownership in the company.