Assignment
Q1.XYZ Company uses a periodic inventory system. The beginning balance of inventory and the purchases made by XYZ during the month of July are given below:
|
Date
|
Description
|
Units
|
Unit cost
|
Total cost
|
|
July 01
|
Beginning inventory
|
500
|
$20
|
$10,000
|
|
July 18
|
Inventory purchased
|
800
|
$24
|
$19,200
|
|
July 25
|
Inventory purchased
|
700
|
$26
|
$18,200
|
|
|
|
|
|
|
Total
|
2,000
|
|
$47,400
|
|
|
|
|
|
|
The XYZ Company sold 1,400 units during the month of July.
Required: Compute inventory on 31st July and cost of goods sold for the month of July using FIFO inventory costing method:
Q2. ALPHA Company reported the following year-end information:
|
Cash
|
$ 52,000
|
|
Short-term investments
|
12,000
|
|
Accounts receivable
|
54,000
|
|
Inventory
|
325,000
|
|
Prepaid expenses
|
17,500
|
|
Accounts payable
|
106,500
|
|
Other current payables
|
25,000
|
Instructions:
1- Explain the purpose of the acid-test ratio.
2- Calculate the acid-test ratio for ALPHA Company.
Q3. Maia's Bike Shop uses the periodic inventory system and had the following transactions during the month of May:
|
May 3
|
Sold merchandise to a customer on credit for $600, terms 2/10, n/30. The cost of the merchandise sold was $350.
|
|
May 4
|
Sold merchandise to a customer for cash of $425. The cost of the merchandise was $250.
|
|
May 6
|
Sold merchandise to a customer on credit for $1,300, term 2/10, n/30. The cost of the merchandise sold was $750.
|
|
May 8
|
The customer from May 3 returned merchandise with a selling price of $100. The cost of merchandise returned was $55.
|
|
May 15
|
The customer from May 6 paid the full amount due, less any appropriate discounts earned.
|
|
May 31
|
The customer from May 3 paid the full amount due, less any appropriate discounts earned.
|
Instructions:
Prepare the required journal entries that Maia's Bike Shop must make to record these transactions.
Q.4 What does FOB stand for? Differentiate between FOB shipping point (or FOB factory) and FOB destination?