Question

Exercise 78 On May 31, 2011. James Logan Company had a cash balance per books of 66,781.50. The bank statement from Farmers Community Bank on that date showed a balance of 6.40460A comparison of the statement with the cash account revealed the following facts. 1. The statement included a debit memo of 40 for the printing of additional company checks 2. Cash sales of 836.15 on May 12 were deposited in the bank. The cash recipes journal entry and the deposit slip were incorrectly made for CS615 The bank credited Logan Company for the corect amount 3. Outstanding checks at May 31 totaled 576 25. Deposits in transit were 1916.15. 4. On May 18, the company issued check No. 1181 for £685 to Barry Trest, on account. The check, which cleared the bank in May, was incorrectly joumalized and posted by Logan Company for E65 5. A £2.500 not receivable was collected by the bank for Logan Company on May 31 plus ESO interest. The bank charged a collection fee of £20. No interest has been accrued on the 6. Included with the cancelled checks was a check issued by Bridgetown Company to Tom Lujak for 1800 that was incorrectly charged to Logan Company by the bank 7. On May 31, the bank statement showed an NSF charge of £680 for a check issued by Sandy Griffon, a customer, to Logan Company on account Instructions You are required to prepare the Bank Reconciliation as on May 30 Questions a) XYZ Company uses the periodic inventory system to account for inventories. Information related to XYZ Company's inventory at October 31 is given below Oct. $4,000 Beginning inventory 8 Purchase 16 Purchase 24 Purchase Total units and cost 400 units SI0.00 800 units @ $10.40 - 600 units @ $10.80 - 200 units @ $11.60 - 2000 units 320 6,480 2.320 $21.120 Instructions 1. Assuming 450 units remains on hand as at October 31. Compute or calculate the cost of ending inventory and Cost of Goods Sold under FIFO method. 2. Assuming 450 units remains on hand as at October 31. Compute or calculate the cost of ending inventory and Cost of Goods Sold using the Weighted-Average Cost method

Answer 1

Solution to Exercise-7 is as under:

James Logan Company
Bank Reconciliation Statement as on May 30,2011
Particulars	Amount
Balance as per Cash Book	£ 6,781.50
Less:
Charges debited by bank for printing additional company checks	-£     40.00
Cash sales incorrectly recorded at 886.15 instead of 836.15	-£     50.00
Deposits in transit	-£1,916.15
Check issued for an amount 685 but recoded in the books for 658	-£     27.00
Commission charged by bank for discounting the note	-£     20.00
Cancellation charges incorrectly charged by bak	-£   800.00
NSF Charges for the check issued by Sandy Grifton	-£   680.00
Add:
Outstanding Checks	£    576.25
Note Receiveble honored and collected	£ 2,500.00
Interest on Note Receivable	£      80.00
Balance as per Bank Statement	£ 6,404.60

Solution to Exercise-8 is as under:

XYZ Company's Inventory as at October 31
Date	Particulars	Quantity (In Units)	Unit Cost ($)	Value ($)	Quantity Balance	Value Balance
Oct-01	Beginning Inventory	400	10.00	4000	400 units @ $10	4000
Oct-08	Purchase	800	10.40	8320	400 units @ $10 800 units @ $10.40	12320
Oct-16	Purchase	600	10.80	6480	400 units @ $10 800 units @ $10.40 600 units @ $10.80	18800
Oct-24	Purchase	200	11.60	2320	400 units @ $10 800 units @ $10.40 600 units @ $10.80 200 units @ $11.60	21120
	Total Units and Cost	2000		21120

a) Calculation of Cost of Ending Inventory and Cost of Goods Sold under FIFO Method (Assuming Ending Inventory on October 31 is 450 units)

Cost of Ending Inventory (450 Units) is: 250 units @ $ 10.80 and 200 units @ $ 11.60 = $ 5020

Cost of Goods Sold (1550 Units i.e. 2000 units-450 units) is: 400 units @ $10, 800 units @ $10.40 and 350 units @ $10.80 = $16100

b) Calculation of Cost of Ending Inventory and Cost of Goods Sold under Weighted Average Method (Assuming Ending Inventory on October 31 is 450 units)

Weighted Average Cost: Total Cost / Total Units = 21120/2000 = $10.56 per Unit

Cost of Ending Inventory (450 Units) is: 450*10.56 = $4752

Cost of Goods Sold (1550 Units i.e. 2000 units-450 units) is: 1550*10.56 = $16368