Part A Beyer Ltd is registered for GST, balances its accounts at month-end, uses special journals, and
Question:
Part A
Beyer Ltd is registered for GST, balances its accounts at month-end, uses special journals, and uses the perpetual inventory system with the FIFO cost flow assumption. All purchases and sales of inventory are made on credit. End of the reporting period is 30 June. Sales and purchases (all net of GST) of product JINX-87 in May 2016 were:
Date | Transaction | No. | Unit cost | ||||||
May 1 May 7 May 11 May 17 May 21 May 24 May 29 | Inventory on hand Purchase Sale @ $35/unit Purchase Purchase return Sale @ $36/unit Sale return (on 24 May sale) | 50 20 54 30 10 30 8 | $10 $11 $12 $11 | ||||||
Required
For product JINX-87, calculate May 2016’s cost of sales and cost of inventory on hand at 31 May 2016, using an inventory record.
Ending inventory $168
Cost of sales $802
Part B
The inventory ledger account balance at 30 June 2016 was $7650, and net realisable value for each product line exceeded cost. The cost of inventory on hand at 30 June 2016 determined by physical count, however, was only $7578. In investigating the reasons for the discrepancy, Beyer Ltd discovered the following.
● Goods costing $87 plus GST were sold for $100 plus GST on 26 June 2016 on DDP shipping terms. The goods were in transit at 30 June 2016. The sale was recorded on 26 June 2016 and the goods were not included in the physical count.
● Goods costing $90 plus GST were ordered on 24 June 2016 on EXW shipping terms. The goods were delivered to the transport company on 27 June 2016. The purchase was recorded on 27 June 2016 but, as the goods had not yet arrived, the goods were not included in the physical count.
● Goods costing $140 (excluding GST) held on consignment for Richmond Ltd were included in the physical count.
Required
Prepare any journal entries required on 30 June 2016 to correct error(s) and to adjust the inventory account (Use the general journal
Ending InventoryThe ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett