Reference no: EM132189906
Topic - Inventory and Retail Operations
Question 1 ABC Ltd has the following information related to its inventory for December:
ABC Ltd uses a perpetual inventory system with FIFO costing.
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Date
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Item
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Quantity
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Unit Cost
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1st December
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Beginning Inventory
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15
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220
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6th December
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Sale
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12
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9th December
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Purchase
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3
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250
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25th December
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Sale
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5
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30th December
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Purchase
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4
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270
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Required:
(a) Complete the following inventory record below.
Inventory Record.
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Date
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Purchases
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Cost of Sales
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Inventory on Hand
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Quantity
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Unit Cost
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Total Cost
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Quantity
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Unit Cost
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Total Cost
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Quantity
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Unit Cost
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Total Cost
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(b) What would Cost of Sales be if ABC Ltd used a periodic inventory system with FIFO costing? Show your workings.
Question 2
Explain the "Lower of Cost and Net-Realisable-Value rule" in 5 lines or less.
Question 3
What would the general journal entries be to record the 6th December sale if the selling price is $330 per unit which includes 10% GST.
Topic - Accounting Information Systems
Question 1 Consider the following transactions and indicate which journal they would be recorded in using an Accounting Information System.
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Transaction
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Journal
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Sale on credit
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Cash sale
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Prepayment of Insurance
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Borrowing money on Long term loan
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Payment of wages
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Purchase of inventory on credit
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Depreciation of Motor Vehicle
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Payment of Accounts payable account
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Expiration of Prepaid Rent
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Collection of Accounts Receivable
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Purchase of inventory for cash
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Collection of accounts receivable
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Closing entries
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Payment of electricity for the month
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Receipt of bank interest
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Sales return of faulty inventory
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Question 2 Identify three advantages of using an Accounting Information System that uses special journals.
Question 3
Describe what the general journal is used for in an Accounting Information System that uses special journals. Give examples of entries that would be recorded in the general journal.
Question 4 - Reflection
In your opinion, should a single employee be responsible for more than one special journal, for example the sales journal and the cash receipts journal? Explain your answer?
Topic - Regulation, PP&E and Intangibles
Question 1
Magpie Ltd uses many kinds of machines in its operations. It constructs some of these machines itself and acquires others from the manufacturers. Machine A was acquired on 1 July 2017. Machine A has a useful life of 5 years and has a zero residual value. The Machine A is depreciated on a straight-line basis.
The following information relates to Machine A that it has recorded in the 2017-18 period.
| Machine A |
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| Cash paid for machine A, including GST of $8,000 |
$88,000 |
| Costs of transporting machine - insurance and transport |
3,000 |
| Labour costs of installation by expert fitter |
5,000 |
| Labour costs of testing machine |
4,000 |
| Insurance costs for 2017-18 |
1,500 |
| Costs of training for personnel who will use the machine |
2,500 |
| Costs of safety rails and platforms surrounding machine |
6,000 |
| Costs of water devices to keep machine cool |
8,000 |
| Costs of adjustments to machine to make it operate more efficiently |
7,500 |
Required
1. Determine the amount at which Machine A should be recorded in the records of Magpie Ltd. For items not included in the cost of the machine, note how they should be accounted for.
2. Prepare journal entries to record:
a. The cost of Machine A and any costs to be expensed.
b. Depreciation expense for the year ended 30 June 2018 for Machine A
3. Prepare an extract of the Statement of Financial Position as at 30 June 2018.
Question 2 - Reflection (Minimum 100 words, Maximum 150 words)
Why do you think the accounting requirements for intangibles assets have become so strict? Should all intangible assets be recognised? Provide examples to help explain your answer.
Attachment:- Reflection Questions.rar