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To be kept a clear structure and organized paper work as accordingly to this guideline. To be included the names, IDs and ver

Part 2: (33 points) DRU Company record of transactions for the month December were as follows Cost $/unit Date Transaction Un

ACT240 Fall2019 Final Report students format (1) AutoSave Off Excel Muhammad Zulqarnain Falak MZ Insert Draw Review Share PCo

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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 STOCK AND PURCHASES
(A)
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 transaction reduce the impact of higher or lower
  • Valuation of profit and inventory on account of any unusual purchases
  • As we can see in FIFO method, inventory is valuing very high as we have buy high cost item in end and in LIFO method, inventory us 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
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