Q1(a) Following transactions were completed by the company:

Jan. 1, Purchased goods worth Rs. 50,000, 2/10, n/30.

Jan 6, Paid the invoice within discount period.

(b) Following transactions were completed by the company:

Jan. 1, Purchased goods worth Rs. 50,000, 2/10, n/30.
Jan 12, Paid the invoice.
Required: Record the above transactions under Gross Method.

Q2(a) Following transactions were completed by the company:

Jan. 1, Purchased goods worth Rs. 50,000, 2/10, n/30.
Jan 6, Paid the invoice within discount period.

(b) Following transactions were completed by the company:

Jan. 1, Purchased goods worth Rs. 50,000, 2/10, n/30.
Jan 12, Paid the invoice.
Required: Record the above transactions under Net Method.

Q3. Smalley, Inc., purchased items of inventory as follows:

Jan. 4 100 units @ $2.00
Jan. 23 120 units @ $2.25
Smalley sold 50 units on January 28. Compute the cost of goods sold for the month under the
FIFO
inventory method.

Q4. Wasson Company purchased items of inventory as follows:

Dec. 2 50 units @ $20
Dec. 12 12 units @ $21
Wasson sold 15 units on December 20. Determine the cost of goods sold for the month under the
LIFO inventory method.

Q5. Murray, Inc., purchased a new inventory item two times during the month of April, as
follows:
Apr. 5 100 units @ $5.00
Apr. 15 100 units @ $5.05
a. What is the amount of the ending inventory of this item on April 30 if the company has sold
75 units and uses the LIFO inventory method?
b. How would this amount differ if the company used the FIFO inventory method?

Q6. Fox Company purchased items of inventory as follows:

May 3 100 units @ $3.05
May 10 150 units @ $3.10
May 15 120 units @ $3.15
By the end of the month of May, Fox had sold 125 units. If the company uses the average-cost
method of accounting for inventory, what is the amount of the ending inventory?
Q7. On May 10, Hudson Computing sold 90 Millennium laptop computers to Apex Publishers.
At the date of this sale, Hudson’s perpetual inventory records included the following cost layers
for the Millennium laptops:
Purchase Date Quantity Unit Cost Total Cost
Apr. 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 $1,500 $105,000
May 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 $1,600 48,000
Total on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 $153,000

Prepare journal entries to record the cost of the 90 Millennium laptops sold on May 10, assuming
that Hudson Computing uses the:
a. Specific identification method (62 of the units sold were purchased on April 9, and the
remaining
units were purchased on May 1).
b. Average-cost method.
c. FIFO method.
d. LIFO method.

Q8. Speed World Cycles sells high-performance motorcycles and motocross racers. One of
Speed
World’s most popular models is the Kazomma 900 dirt bike. During the current year, Speed
World
purchased eight of these cycles at the following costs:

Purchase Date Quantity Unit Cost Total Cost

July 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 $4,950 $ 9,900
July 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5,000 15,000
Aug. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5,100 15,300
8 $40,200
On July 28, Speed World sold four Kazomma 900 dirt bikes to the Vince Wilson racing team.
The
remaining four bikes remained in inventory at September 30, the end of Speed World’s fiscal
year.
Assume that Speed World uses a perpetual inventory system. (See the data given above.)
Instructions
a. Compute the cost of goods sold relating to the sale on July 28 and the ending inventory of
Kazomma 900 dirt bikes at September 30, using the following cost flow assumptions:
1. Average cost.
2. FIFO.
3. LIFO.
b. Using the cost figures computed in part a, answer the following questions:
1. Which of the three cost flow assumptions will result in Speed World Cycles reporting the
highest net income for the current year? Would this always be the case? Explain.
2. Which of the three cost flow assumptions will minimize the income taxes owed by Speed
World Cycles for the year? Would you expect this usually to be the case? Explain.
Q9. On January 15, 2011, BassTrack sold 1,000 Ace-5 fishing reels to Angler’s Warehouse.
Immediately
prior to this sale, BassTrack’s perpetual inventory records for Ace-5 reels included the following
cost layers:
Purchase Date Quantity Unit Cost Total Cost
Dec. 12, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 $29 $17,400
Jan. 9, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 32 28,800
Total on hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 $46,200
Instructions
a. Prepare a separate journal entry to record the cost of goods sold relating to the January 15 sale
of 1,000 Ace-5 reels, assuming that BassTrack uses:
1. Specific identification (500 of the units sold were purchased on December 12, and the
remaining 500 were purchased on January 9).
2. Average cost.
3. FIFO.
4. LIFO