Question

Farmer Bridgeport Industries Inc. is in the business of producing organic foods for sale to restaurants and in local markets. The company uses IFRS and has a June 30 fiscal year end. As an experiment, the company has decided to attempt raising organic free-range chickens. On May 1, 2017, Farmer Bridgeport purchased 110 new hatchlings for cash at a total cost of $1,080. The company incurred feed and labour costs of $160 per month to look after the chicks. Their (acceptable) accounting policy is to capitalize these costs. On June 30, the company estimated that the chickens would mature in mid-October. At year end they had a fair value of $1,900 and the company would have to transport the chickens to their customers at an average cost of $3 per chicken. On October 30, all 110 chickens had matured and the company sold and shipped 50 of the chickens to one of its key customers for $30 per chicken. Transportation costs were $3 per chicken, as expected.

(a) Prepare the journal entries to record the inventory activity relating to the chickens for the month of May. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit May 1 (To record the inventory total cost) May 1 (To record the feed and labour costs)