Q1. XYZ sells a variety of merchandise to retail stores on open account, but it insists that any customer who fails to pay an invoice when due must replace it with an interest-bearing note. The company adjusts and closes its accounts at January 31. Among the transactions relating to notes receivable were the following:

Oct. 1 Received from a customer (ABC) a nine-month, 12% note for Rs.21,000 in settlement of an account receivable due today.

July 1. Collected in full the nine-month, 12% note receivable from Party Plus, including interest.

Record the journal entries. Give closing entries necessary at the end of the year on Jan 31.

Q2. Herbor Company uses a periodic inventory system. The company's records show the beginning inventory of product No.T12 on January 1 and the purchases of this item during the current year to be as follows:

Jan. 1 Beginning inventory900 units @ Rs.109,000

Feb.23 Purchase1200 units @ Rs.1113,200

Apr. 20 Purchase3,000 units @ Rs.11.2033,600

May. 4 Purchase4,000 units @ Rs.11.6046,400

Nov. 30 Purchase900 units @ Rs.1311,700

Total10,000 unitsRs.113,900

After physical count it was realized that 8400 units were sold during the year. Determine the cost of the ending inventory, based on each of the following methods of inventory valuation.

a) Average cost b) LIFOc) FIFO

Which of the above methods (if any) results in the same ending inventory valuation under both periodic and perpetual costing procedures? Explain.