Question

Tomlin Limited, a New Zealand GST registered company, is a retailer of filter systems. Shown below are the company's beginning inventory and purchases of a particular filter for unit Z-398 in March, all exclusive of GST Beginning inventory (March 1st) 0 Purchase (March 5th) Purchase Return (March 7th) Purchase (March 26th) Purchase (March 31st) Quantity Unit Cost Total Cost $190 $212 $212 $215 $220 $0 $4,240 $1,060 $4,300 $6,600 20 20 30 On March 21st, Tomlin Limited sold, on credit, 10 filters for $370 per unit, excluding GST Additional information: 1. 2. Include the effects of GST where applicable. All purchases are made from the supplier "Maker Factory on 3/8, n/30 credit terms. Maker Factory is also GST registered. The beginning balance of accounts payable owing to Maker Factory is $0 as at March 1st. For (a), (b), (c), (d), (e) & (g) below, assume use of a perpetual inventory system. Journal entries do not require narrations. 3. 4. 5. Required: (a) What is the required joumal entry for the transaction on Assume the related original purchase on March 5th was on credit and had not yet been paid. (b) On March 12th, Tomlin Limited settled its account with entry to record this transaction? actory ipMull. What is the required joumal (c)What is the value of ending inventory as at March 31st under each of the following cost flow First-in, first out (FIFO) ii) Last-in, first out (LIFO) (d) What is the average cost per unit for the ending inventory Average Cost (WAC) cost flow assumption was used? as at March 31st if the Weighted (e) As at March 21st, state whether Tomlin Limited can expect a GST payment refund from the Inland Revenue. State the dollar value of the GST payment or refund expected. (f) gnore (a) to (e) above in answering this question. Tomlin Limited made a credit sale to a China based customer on March 30th, shipping terms FOB shipping point, and exported the filters on March 31st for delivery in the following month on April 2nd to China. Discuss, for Tomlin Limited, the effect(s) of this transaction on the March financial statements, including GST implications, if any. No journal entries or calculations are required to answer this question

Answer 1

Solution to C
(I) FIFO Basis	Quantity	Price	Total
31st March	30	220	6,600
26th March	20	215	4,300
7th March	4	212	848
Total	54		11,748
(II) LIFO Basis	Quantity	Price	Total
5th March	20	212	4,240
7th March	5	212	1,060
26th March	20	215	4,300
31st March	9	220	1,980
Total	54		11,580
Solution to D
Calculation of Weighted Average cost per unit
Particulars	Quantity	Price	Total
Opening	-	190	-
Purchases
5th March	20	212	4,240
7th March	5	212	1,060
26th March	20	215	4,300
31st March	30	220	6,600
Total	75		16,200
Weighted Average Cost per unit			216
Solution to E
Solution has been given on assumption that GST rate will be 15% in NewZealand
Calculation of GST refund				GST @15%
Particulars	Quantity	Price	Total	Input Tax Credit	Output Tax
Opening	-	190	-	-
Purchases
5th March	20	212	4,240	553
7th March	5	212	1,060	138
26th March	20	215	4,300	561
31st March	30	220	6,600	861
Total	75		16,200
Weighted Average Cost per unit			216
Sales
21st March	21	370	7,770		1,013.48
				Total Input Tax Liability	2,113
				Total Output GST Liability	1,013
				Refund of GST	1,100
Solution to F
Here Tomlin Limited makes sales on 30th March and exported the same on 31st March but actual delivery has been made on 2nd April of the following month.Export Sale has been completed on 30th March, hence recording of the sales shall be made in the financial statement ended on 31st March of the respective year.
Implication of GST- It is the Export sales and GST paid on inputs used to supply the exported goods shall be refunded as per the GST law.