1.The following information about Q, a stock item sold by Patel has been presented to you.

October 1 b/d 100 units @ sh. 20

October 5 Sale 80 units @ sh. 25

October 7 Purchase 200 units @ sh. 22

October 13 Sale 60 units @ sh. 27

October 17 Purchase 300 units @ sh. 23

October 24 Sale 320 units at sh. 28

October 29 Purchase 150 units @ sh. 24

October 31 Sale 200 units @ sh. 29

Required:

Compute the cost of closing stock and the gross profit under each of the following cost flow assumptions.

a)LIFO periodic

b)LIFO perpetual

c) Weighted average perpetual.

question 2

Plain ltd purchased equipment at a cost of sh. 800,000 on 1^st August 2010.The company incurred a further sh. 100,000 to transport the equipment.Also sh. 50,000 was used to pay for installation costs while a further sh. 20,000 was spent on test runs.The equipment has a useful life of five years and a salvage value of sh. 170,000.The company's policy is to provide for full years depreciation in the year of purchase and no depreciation in the year of disposal.

Required:

a)Cost of the equipment.(2 marks)

b)Compute depreciation for the years 2010 and 2011 under

i)Sum of years digits method

ii)Double declining balance method

iii)Output method(12 marks)

c) Assuming the equipment was disposed on 1^st May 2012 for sh. 600,000 show the journal to record the disposal.