Because Natalie has had such a successful
first few months, she is considering other opportunities to develop her
business. One opportunity is the sale of European mixers. The owner of Kzinski
Supply Company has approached Natalie to become the exclusive distributor of
these fine mixers in her state. The current cost of a mixer is approximately
$575, and Natalie would sell each one for $1,150. Natalie comes to you for
advice on how to account for these mixers. Each appliance has a serial number
and can be easily identified.

Natalie has come to you for your advice on how
to account for these mixers and asks you the questions below, which you must
address.

Would you consider these
mixers to be inventory, or should these mixers be classified as supplies
or equipment?

Which inventory tracking
system should Natalie use: perpetual or periodic?

Which system do you
think is better: perpetual or periodic?

Which system would you
recommend for the type of inventory that Natalie wants to sell?

How often does Natalie
need to count inventory if she maintains it using the perpetual system? In
contrast, does she need to count inventory at all?

Provide your responses to the questions in a
Word document. Use the unit lesson, required unit resources, and suggested unit
resources to formulate your response. Your response should be a minimum of two
pages in length and include at least two references. Adhere to APA Style when
creating citations and references for this assignment.

Part II

Natalie is busy establishing both divisions of
her business (cookie classes and mixer sales), and she is completing her
business degree. Her goals for the next 11 months are to sell one mixer per
month and to give two to three classes per week.

The cost of the fine European mixers is
expected to increase. Natalie has just negotiated new terms with the owner of
Kzinski Supply Company, which will include shipping costs in the negotiated
purchase price (mixers will be shipped free on board (FOB) destination). Assume
that Natalie has decided to use a periodic inventory system and now must choose
a cost flow assumption for her mixer inventory. The transactions listed below
occur in February to May 2020.

Feb. 2: Natalie buys two deluxe mixers on
account from Mixer Supply Company for $1,200 ($600 each), FOB destination,
terms n/30.

Feb. 16: She sells one deluxe mixer for $1,150
cash.

Feb. 25: She pays the amount owed to Mixer
Supply Company.

Mar. 2: She buys one deluxe mixer on account
from Mixer Supply Company for $618, FOB destination, terms n/30.

Mar. 30 : Natalie sells two deluxe mixers for
a total of $2,300 cash.

Mar. 31: She pays the amount owed to Kzinski
Supply Company.

Apr. 1 : She buys two deluxe mixers on account
from Mixer Supply Company for $1,224 ($612 each), FOB destination, terms n/30.

Apr. 13: She sells three deluxe mixers for a
total of $3,450 cash.

Apr. 30: Natalie pays the amount owed to Mixer
Supply Company.

May 4: She buys three deluxe mixers on account
from Mixer Supply Company for $1,875 ($625 each), FOB destination, terms n/30.

May 27: She sells one deluxe mixer for $1,150
cash.

For Part II, determine the cost of goods
available for sale. You will recall from Chapter 5 (see Part I above) that at
the end of January, Cookie Creations had three mixers on hand at a cost of $575
each. For Part II of the assignment, you will calculate the following items: ·

ending inventory,

cost of goods
sold,

gross profit, and

gross profit rate under
each of the following methods: last-in, first-out (LIFO); first-in,
first-out (FIFO); and average cost.