The following questions have been sent in by your client seeking clarification and further explanation of the practical answers you have already completed.

1. Paul has asked you to identify the alternative inventory recording system(s) that doesn’t use stock cards and how cost of goods sold can be worked out without a stock card.
2. Jim was able to work out that the Energised Athletes had recorded outflows of $34,000 from investing activities and $79,000 from financing activities. Taking into account the cash flows from operation explain to Jim if these are good or bad results for the business.
3. Explain to Paul the results of the three ratios you calculated in Question 4 and if Paul’s statement that the business profitability is excellent is supported by those ratios.
4. Jim is quite upset with Paul for selling the mower as he knew someone who was willing to exchange the mower for motor bike he was interested in. Jim says the motor bike was worth $8,000 and so they would have been able to record a much bigger asset and a profit if they had done this exchange. Explain to Jim he is incorrect in using the $8000 in his calculation and how fair value would be used in this situation.

Answer rating: 100% (QA)

1 Period ic inventory system In a periodic inventory system inventory is only counted and recorded at specific intervals such as once a month or once a quarter Cost of goods sold is calculated by taki... View the full answer