1) Nelson Framing began March with 73 units of inventory that cost $23 each. During the month, Nelson made the following purchases:
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March 4..................................................
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113 @ $26
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12...................................................
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81 @ 30
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19...................................................
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167 @ 32
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25...................................................
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44 @ 35
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Sales for the month of March shown below:
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March 10 ...............................................
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101 @ $36
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16...................................................
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68 @ 40
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26...................................................
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152@ 42
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28...................................................
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25 @ 45
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The business uses the periodic inventory system.
Required
1. Determine the ending inventory and cost-of-goods-sold amounts for the March financial statements under (a) average cost, (b) FIFO cost, and (c) LIFO cost. Round average cost per unit to the nearest cent and all other amounts to the nearest dollar.
2. How much are the sales revenue for March? Calculate Nelson's gross profit for March under each method.
3. Which method will result in the lowest income taxes for Nelson? Why?
2) The following information relates to the business of Peter Jiem, Real Estate as at 31 January 2010.
1. The Bank Statement balance as at 31 January 2010 was $24 663 CR.
2. There was an EFT payment of $680 for insurance made on 15 January 2010.
3. The Bank Service Charge for January was $50. This included $10 for the account fee, $15 for printing cheque books and $25 for the establishment of a temporary overdraft facility.
4. A comparison between the Bank Statement and the Cash Payments Journal reveals that the following cheques have not yet been presented for payment:
Chq no. 1520 $1 940
Chq no. 1522 $ 493
Chq no. 1525 $4 534
5. $4 076 was deposited into the bank account on 30 January 2010. The Bank Statement does not show this deposit.
6. A cheque for $882 was dishonoured by the bank due to insufficient funds in the customer's account.
7. On 13 January 2010 the bank deposited $525 into the business bank account. This amount should have been deposited into the account of Peter Jiem.
8. There were two EFT collections made during the month as follows:
3 January $1 250 - Customer deposit
7 January $2 000 - Collection of Bill Receivable which included $244 of interest
9. Cheque number 1531 has been recorded in the Cash Payments Journal as $8 252. The correct amount, which is the amount that recorded on the Bank Statement is $8 525.
10.The Cash at Bank balance as at 31 January 2010 is $19 882 DR.
Required:
1. Prepare the Bank Reconciliation Statement as at 31 January 2010.
2. Prepare a schedule of the necessary adjustments to give the correct balance of the Cash at Bank account as at 31 January 2010.
3. Record the journal entries to record the adjustments.
3) The country Road has its office in Richmond, Victoria. The Country Road brand, an iconic Australian label launched in 1974. It is engaged in the design, sourcing, retailing, licensing and wholesale distribution of quality lifestyle products.
Go to website of Country Road at www.countryroad.com.au. (about us > investor information> and scroll down) Obtain the 2010 annual reports or financial statements and answer the following questions using the consolidated balances.
i. How much was the Country Roads inventory at year ended 30 June 2010?
ii. How does Country Roads value its inventories? Which cost method does the company used?
iii. If Country Roads wants to show the highest Gross Profit when inventory costs are raising, which inventory system will they have to use? Which system will provide the lowest Gross Profit?
iv. What was the proportion of inventories to total current assets? What was the proportion of inventories to total assets?
v. Calculate the Current ratio, Debt ratio and Inventory turnover ratio.
vi. Comment about the performance of Country Road in 2010 compared to 2009 based on these three ratios.
4) Suppose the Prentice Hall the Publisher, sells 1000 books on credit for $16.50 each, including GST at 10% (the cost of these books is $8000, excluding GST.) One hundred of these books (cost, excluding S, $800) were damaged in shipment, so Prentice Hall later received the damaged goods as sales returns. The customer then paid the balance within the discount period. Credit terms were 2/15 net 30.
a. Journalise Prentice Hall's
Sales
Sales return
Cash collection transactions
b. How much gross profit did Prentice Hall earn on this sale?