Axel Houston imports and sells replicas of nineteenth century Swiss clocks.

• Although payment for inventory imported is made with the order from NL Clocks Ltd, ownership only passes on delivery.

• On 1 March 20x7, Axel has five clocks in inventory that he has recorded at a total cost of R400.

• Axel uses the perpetual inventory system for recording transactions relating to inventory, and cost of inventory is arrived at on the FIFO method.

Transactions for the year ended 28 February 20x8:

1 On 1 March 20x7, placed an order for 10 clocks of R70 each, for which payment was made with the order.

2 On 10 May, sold one clock on credit, R150.

3 on 1 August, the consignment ordered in March arrived. Axel paid a total of R150 for freight charges and a total of R50 for customs duty on the clocks.

4 On 20 August, sold nine clocks for R150 each on credit.

5 On 1 September, Axel placed a further order for 20 clocks. The price had now risen to R75 per clock. Payment was made with the order.

6 On 15 September, Axel took a clock from inventory that he took home and placed on the wall of his living room.
7 On 1 December, the order placed in September arrived. Axel paid a total of R320 for freight charges and a total of R120 for customs duty on the clocks.

8 On 15 December, sold 19 clocks for R180 each on credit.

On 28 February 20x8, Axel found that the number of clocks on hand was the same as his records.

You are required to:

1. Prepare the journal entries required to record the transactions detailed above. (Narrations are required.)

2. Mr Houston is considering changing his accounting policy to the weighted-average method. Calculate the cost of sales for the year ended at 28 February 20x8 under each of the two methods.