Valentine Florists Operate a Flower Shop

question 125

Essay

Valentine Florists operate a flower shop. Because most of their orders are via telephone or fax, numerous orders have to be reworked. The average cost of the reworked orders is $6: $3.75 for labor, $1.50 for more flowers, and $0.75 for overhead. This ratio of costs holds for the average original order. On a recent day, the shop reworked 48 orders out of 249. The original cost of the 48 orders totaled $720. The average cost of all orders is $16.16, including rework, with an average selling price of $30
Required:
Prepare the necessary journal entry to record the rework for the day if the shop charges such activities to Arrangement Department Overhead Control. Prepare a journal entry to transfer the finished goods to Finished Goods Inventory.

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Definitions:

Authorized Shares

Authorized shares are the maximum number of shares that a corporation is legally permitted to issue, as specified in its corporate charter.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership equity spread among individual shareholders.