Assessment Instrument Cover Sheet

Course Code: BACC 205 Course Title: Principles of Financial Accounting

Semester: Fall Academic year: 2021/2022
Assessment Instrument: Group Assignment Due Date: 30/11/2021
Course Instructor: Dr. Asma Masrouki College/Department: DBS

This instrument assesses the following Course Learning Outcomes (CLO):

Tick Course Learning Outcomes (CLO)* Marks
X ( CLO 4) Account for merchandizing operations and inventory valuation. 10

Total from 10 points 10

*Linkages to Program Outcomes and Concentration Outcomes are provided in the Syllabus.

Student’s Name: ............................................

Student’s ID No: ............................................

Question 1 (1.5 marks)

1
The following data was taken from ledger account balances and supplementary data for the
Whisk Company. Whisk Company uses periodic inventory method to account for its inventory.

Merchandise inventory, beginning......................................................................... $ 40,000

Merchandise inventory, ending.............................................................................. 46,000
Purchases................................................................................................................ 430,000
Purchases discounts................................................................................................ 12,000
Purchases returns and allowances.......................................................................... 6,000
Sales....................................................................................................................... 800,000
Sales discounts....................................................................................................... 6,400
Sales returns and allowances.................................................................................. 3,600
Transportation-in.................................................................................................... 20,000

Required:

Show the computation, in Income Statement format, of net sales, cost of goods sold, and gross
profit for the year ended December 31, 2021

Question 2 (4 marks)

2
Prepare journal entries to record the following merchandising transactions of Cabela’s, which
uses the perpetual inventory system.
July  1 Purchased merchandise from Boden Company for $6,600 under credit terms of 2/15,
n/30, FOB shipping point, invoice dated July 1.
   2 Sold merchandise to Creek Co. for $900 under credit terms of 2/10, n/60, FOB
destination, invoice dated July 2. The merchandise had a cost of $550.
   3 Paid $110 cash for freight charges on the purchase of July 1.
4 Paid $100 cash for freight charges on the sale of July 2.
5 Gave a price reduction (allowance) of $50 to Creek Co. for merchandise sold on July 2.
   11 Returned $1,000 of merchandise purchased on July 1 from Boden.
   12 Received the balance due from Creek Co. for the invoice dated July 2.
   16 Paid the balance due to Boden Company.
  
  
Date Account titles Debit Credit

1/07

02/07

02/07

03/07

04/07

05/07

11/07

12/07

16/07
Question 3: (4.5 marks)

3
Case 1: Salmone Company reported the following purchases and sales of its only product.
Salmone uses a perpetual inventory system. Determine the cost assigned to the ending
inventory and cost of goods sold using FIFO, LIFO and Weighted Average Methods. (3 marks)
 
Date Activities Units Acquired at Units Acquired at
Cost Cost
May 1 Beginning Inventory 260 units @ $11
5 Purchase 275 units @ $13
10 Sales   195 units @ $21
15 Purchase 155 units @ $14  
24 Sales 145 units @ $22

Answer:
FIFO perpetual

Date Purchases CGS Inventory Balance

May 1

10

15

24

Total

LIFO perpetual
Date Purchases CGS Inventory Balance
May 1

10

15

24

Total

4
Weighted Average Perpetual

Date CGS Inventory balance

Purchases

May 1

10

15

24

Total

Case 2: Given the following information, determine the Cost of Goods Sold for December 31
under periodic inventory system using the FIFO, LIFO and Weighted Average methods. (1.5
marks)
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit
December 15: 20 units were purchased at $10.15 per unit
December 22: 18 units were sold at $35 per unit
Answer:

FIFO periodic

Date Goods available for CGS Ending Inventory

sale

5
LIFO periodic

Date Goods available for CGS Ending Inventory

sale

Weighted average periodic

Date Goods available for CGS Ending Inventory

sale