Question

4) A company reports the following transactions for its fishing rods for the month of April. They use a perpetual inventory system Units 50 Date Aprill April 6 April 9 April 14 April 20 Unit Cost $325 $350 Explanation Inventory Purchase Sale Purchase Sale Purchase $355 April 28 $360 a) Identify the Cost of Goods Sold and Ending Inventory under FIFO (6 marks) b) Identify the Cost of Goods Sold and Ending Inventory under average costing (6 marks) c) Under average costing the ending inventory counted 35 rods. Do the journal entry to correct the ending inventory. (4 marks) 5) A company sells three products whose prices are sensitive to changes in value. The following inventory valuation is available for these products at March 31. Product Units Unit Cost N et Realizable Value 60 $8 a) Calculate the inventory at the lower of cost and net realizable value (4 marks) b) do the journal entry to adjust the inventory on the balance sheet (4 marks) 6) On July 31 Dubeau Ltd had a cash balance per books of $7,393. The statement from the bank showed a balance of $9,134. A comparison of the bank statement with the company's accounting records revealed the following: 1. The bank statement included a debit memo of $50 for bank service charges 2. The bank statements included two credit memos. The first was an electronic deposit of $2,031 received from a customer on account. The second was for $24 of interest earned during the month 3. The July 31 cash receipts of $1,393 were not included in the bank deposits for July. These receipts were deposited by the company in the bank's night deposit after the bank closed on July 31. 4. Company cheque for $585 to settle an account payable had been cashed but incorrectly recorded in the company's general journal at $855. 5. Cheques outstanding on June 30 were $922. Of these, S689 cleared the bank the bank in July. There were $1,446 of cheques written in July that were still outstanding

Answer 1

Fishing Rods FIFO Perpetual Purchases Cost of goods sold Unit Cost Total Cost Units Unit Cost Total Cost Units Units Date Apr-01 Apr-06 25 350 8750 50 Apr-09 45 325 14625 Balance Unit Cost Total Cost 325 16250 325 16250 350 8750 325 1625 350 8750 1625 350 8750 355 7100 355 7100 Apr-14 20 3 55 7100 325 Apr-20 5 25 325 350 1625 8750 Apr-28 20 3 60 7200 20 20 355 360 355 360 7100 7200 7100 7200 Apr-30 Purchases 23050 COGS 25000 Ending 14300 Average Purchases Cost of goods sold Unit Cost Total Cost Units Unit Cost Total Cost Units Units Date Apr-01 Apr-06 25 350 8750 25 75 45 333 15000 Apr-09 Apr-14 20 355 7100 Balance Unit Cost Total Cost 325 16250 325 16250 350 8750 333 25000 333 10000 333 10000 355 7100 342 17100 342 6840 342 6840 360 7200 14040 351 14040 20 30 342 10260 Apr-20 Apr-28 20 360 7200 20 351 Apr-30 Purchases 23050 COGS 25260 Ending 14040 Correction Entry Dr. Date Particulars Apr-30 Cost of goods sold a/c To Inventory (40 - 35 ) x 351 = 1755 Debit in $ Credit in $ 1755 1755

Company Product Units NRV Unit cost Total Cost 160 240 600 360 1360 Total NRV LCNR 140 140 280 240 480 480 320 320 1220 1180 0000 Correction Entry Date Particulars Mar-31 Cost of goods sold a/c To Inventory (1360-1180) Debit in $ Credit in $ Dr. 180 180

Dubeau Ltd. Bank Reconciliation For the Month ending Jul 31 Balance as per Bank Statement Add: Deposit in Transit 7393 1393 2031 9134 Balance as per Cash Book Add: Electronic credit Interest credited 1393 Correction ( 855 - 585) 10527 Deduct: Bank Service Charges NSF 1679 8848 Adjusted Cash Balance 2325 9718 Deduct: Cheques outstanding June July Adjusted Cash Balance 820 233 1446 870 8848 Debit in $ Credit in $ Date Particulars Jul-31 Office Expense a/c To Cash Dr. 50 2055 Jul-31 Cash a/c Dr. To Accounts Rceivable To Interest Revenue 2031 24 270 Jul-31 Cash a/c Dr. To Accounts Payable 270 Jul-31 Accounts Rceivable a/c Dr. Office Expense a/c Dr. To Cash 800 20 820