PART 1 | |||||
CASH FLOW STATEMENT | |||||
OPENING CASH | 44000 | ||||
INFLOW- | NET INCOME | 2,000,000 | |||
INVENTORY | 30,000 | ||||
ACCOUNTS PAYABLE | 12,000 | ||||
INVESTMENT | 45,000 | ||||
BONDS ISSUED | 60,000 | 2,147,000 | |||
2,191,000 | |||||
OUTFLOW- | ACCOUNTS RECEIVABLE | 15,000 | |||
SALARY PAYABLE | 24,000 | ||||
EQUIPMENT | 350,000 | ||||
CASH DIVIDEND | 48,000 | 437,000 | |||
CLOSING CASH | 1,754,000 |
PART 2 | |||||||||
(A) | STOCK AND PURCHASES | ||||||||
DATE | UNITS | COST/UNIT | COST OF GOODS SOLD | ||||||
1 | 2,000 | 6 | 12,000 | ||||||
10 | 3,000 | 8 | 24,000 | ||||||
15 | 1,500 | 10 | 15,000 | ||||||
18 | 1,800 | 11 | 19,800 | ||||||
25 | 1,000 | 14 | 14,000 | ||||||
9,300 | 9.12 | 84,800 | |||||||
SALES | 5000 @ 28/ UNIT | ||||||||
IF FIFO METHOD | |||||||||
COST OF GOODS SOLS | |||||||||
DATE | UNITS | COST/UNIT | COST OF GOODS SOLD | ||||||
1 | 2000 | 6 | 12,000 | ||||||
10 | 3000 | 8 | 24,000 | ||||||
5000 | 36,000 | ||||||||
INVENTORY | |||||||||
DATE | UNITS | COST/UNIT | COST OF GOODS SOLD | ||||||
15 | 1500 | 10 | 15,000 | ||||||
18 | 1800 | 11 | 19,800 | ||||||
25 | 1000 | 14 | 14,000 | ||||||
4,300 | 48,800 | ||||||||
IF LIFO METHOD | |||||||||
COST OF GOODS SOLS | |||||||||
DATE | UNITS | COST/UNIT | COST OF GOODS SOLD | ||||||
10 | 700 | 8 | 5,600 | ||||||
15 | 1,500 | 10 | 15,000 | ||||||
18 | 1,800 | 11 | 19,800 | ||||||
25 | 1,000 | 14 | 14,000 | ||||||
5,000 | 54,400 | ||||||||
INVENTORY | |||||||||
DATE | UNITS | COST/UNIT | COST OF GOODS SOLD | ||||||
1 | 2,000 | 6 | 12,000 | ||||||
10 | 2,300 | 8 | 18,400 | ||||||
4,300 | 30,400 | ||||||||
IF AVERAGE COST METHOD | |||||||||
COST OF GOODS SOLD(5000*9.12) | 45,600 | ||||||||
INVENTORY(4300*9.12) | 39,216 | ||||||||
(B) | Company should use average cost method. | ||||||||
As it gives clear and fair view of all transactions and reduce the impact of higher or lower | |||||||||
valuation of profit and inventory on account of any unusal purchases | |||||||||
As we can see in FIFO method,inventory is valuing very high as we have buy high cost | |||||||||
items in end and in LIFO method, inventory is valuing very low as we have lower value purchase | |||||||||
in beginning. Whereas we can see, inventory is optimum in average cost method | |||||||||
So it will be better to start using this method only. |
PART 3 | |||||
PRODUCTS | A | B | C | ||
a | SELLING PRICE | 700 | 650 | 800 | |
b | COST | 480 | 250 | 350 | |
c | COST TO COMPLETE | 150 | 200 | 350 | |
d | COST TO SELL | 100 | 150 | 120 | |
a-c-d | NRV | 450 | 300 | 330 | |
LOWER OF | UNIT/VALUE | 450 | 250 | 330 | |
NRV OR COST | |||||
IF UNITS | |||||
4300 | 1935000 | 1075000 | 1,419,000 | ||
FINAL INVENTORY VALUE |
To be kept a clear structure and organized paper work as accordingly to this guideline. To...
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