Why should a company establish an internal control structure? (2 marks)

 

Evaluate the advantages and disadvantages of Perpetual Inventory System against Periodical Inventory System respectively. (2 marks)

Journalise the transactions below under required merchandising inventory system (8 marks)

On 6th Nov, Perfect Furniture bought 20 chairs at a cost of $20 each for a total of $400. Assumes that Perfect Furniture adopts Periodical Inventory Procedure and record the journal.

On 10th Nov Perfect Furniture sold 8 chairs at a price of $30 each for a total of $240 on account. Assumes that Perfect Furniture adopts Periodical Inventory Procedure and record the journal.

On 6th Nov, Perfect Furniture bought 20 chairs at a cost of $20 each for a total of $400. Assumes that Perfect Furniture adopts Perpetual Inventory Procedure and record the journal.

On 10th Nov Perfect Furniture sold 8 chairs at a price of $30 each for a total of $240 on account. Assumes that Perfect Furniture adopts Perpetual Inventory Procedure and record the journal.

Q4. Account and Account Balance (8 marks)

The following are selected accounts and account balances of Gorr Company on December 31:

Inventory Land Wage Payable

Capital Stock Retained Earnings Revenues Dividends Advertising Expenses

Required:

Indicate whether the account is a permanent (P) or temporary (T)

account.(4 marks)

Indicate the normal balance in terms of debit (Dr.) or credit (Cr.). (4marks)

WRITE ANSWER HERE:

Accounts Permanent (P) or Temporary (T) Normal Balance Dr. or Cr.

Inventory Land Wages Payable

Share Capital

Retained Earnings

Sales

Dividends

Advertising Expense