1. Sun Hotel had the following transactions that took place during the month of May 2015 for the soft drinks sales and purchases in the Restaurant QUANTITY UNIT COST (K) unit price (K) 1 May Opening inventory 8,100 20 5 May Purchases 13,600 25 7 May Sales 10,800 45 15 May Sales 9,450 50 24 May Purchases 5,400 30 30 May Sales 1,890 55 Required: Calculate the closing inventory and cost of goods sold if Sun hotel uses the following valuation methods (a) First In First Out Continuous system (5 marks) (b) Weighted Average Cost Periodic system(5 marks) c) For each of the above 2 methods, prepare the income statement summary showing the sales, costs of sale and the gross profit. Which method would you recommend if Sun hotel wants to maximize profit.(3 marks) d) Assume that at the end of May each unit of soft drinks above had the replacement cost of K25. These units can be sold at K 35 per unit, with K7 as cost of sales per unit. With reference to IAS 2 (Inventory) Find the inventory amount to be presented in the financial statement at the end of May 2015 if the company uses (i) FIFO Continuous system, (ii) WAC Weighted Average Cost Periodic. (4 marks) (Refer to question 2 (a) &(b) above e) At the end of the year it was discovered that the closing inventory for the year 2015 was overstated by K50, 000. While that of the year 2014 was overstated by K150,000. What will be the effect of this error on the tax payable to Zambia Revenue Authority for the years 2014 and 2015