- QUESTION 1 Part A The following transactions have been extracted from the records of Whiteley. P/L for the month of June, 2020. Whiteley uses the perpetual inventory system. Its annual reporting date is 30 June. Ignore GST. No. of units Unit cost 2020 June 1 Beginning balance 640 $9.60 9 Sales 180 14 400 $10.40 18 Purchases Purchases Sales returns 400 $10.80 21 100 $9.60 $10.80 24 Purchase returns 200 27 Sales 400 30 Purchases 200 $10.80 Required: Using a perpetual system and the moving average method, (round average unit costs to two decimal places). Record the inventory transactions on the stock card provided. Calculate the cost of the year- end inventory and the cost of sales. Purchases Sales Balance Date Particulars Units Unit Total Units Unit Total Units Unit Total cost cost cost cost cost cost QUESTION 1 Part B The following information relates to the inventory of Bryce Ltd during June: June 1 Beginning Inventory Purchased 1500 units 3 125 units @ $9.00 @ $9.80 3 3 10 Purchased 1625 units @ $10.20 12 Sold 1 800 units 17 Sold 2 100 units 25 Sold 1 500 units Bryce Ltd uses a periodic inventory system. Ignore GST. During the month 5 400 units were sold for $68 040 plus GST. A physical count of inventory on June 30 confirmed that 850 units were on hand. Required: Prepare an income statement down to Gross Profit for June, using each of the following costing methods: a) Specific identification method assuming that 1 080 units were sold from beginning inventory, 2760 units were sold from the first purchase and the remainder from the 10 June purchase b) FIFO method. c) Income Statement a) Specific identification Ending inventory: Cost of sales b) FIFO Units $ Goods available Ending inventory @ Cost of sales + Bryce Ltd. Income Statement Period ending 30 June 20XX Specific Identification FIFO QUESTION 2 Chemtech Ltd purchased machinery costing $135,300 incl. GST. The machinery is expected to have a residual value of $19,800 incl. GST at the end of its useful life of 6 years or 75,000 hours. Required A. Assume the machinery was purchased on 1 January 2019 and that the accounting period ends on 31 December. Calculate the depreciation expense (rounding to two decimal places if necessary) for the years 2019 & 2020 using each of the following depreciation methods: B. 1. Straight-line method 2. Sum of the year digit method 3. Diminishing balance method at a rate of 25% per annum Assume the machinery was purchased on 1 April 2020 and that the accounting period ends on 30 June 2020. Calculate the depreciation expense (rounding to two decimal places if necessary) for the year ending June 30 2020 using each of the following depreciation methods, round to the nearest dollar: 1. Straight-line method 2. Diminishing balance method at a rate of 25% per annum 3. Units of production method (assume machinery usage hours were 12,000 during the financial year). A. 1. Straight-line: Sum of year digits: 2. 3. Diminishing balance: B. 1. Straight-line: 2. Diminishing balance: 3. Units-of-production: QUESTION 3 Part A Xiao, Yiheng and Zhiwen are in partnership with profits shared in the ratio of 2:2:1 respectively. The partnership agreement provides the following: Interest on capital to be credited at 10% p.a. Interest on drawings to be charged at 12% p.a. Zhiwen is to receive a salary in addition to any profit share Loans by partners to the business are at an interest rate of 8% p.a. The following information relates to the 30 June, 2020 account balances before applying any interest payments and before the profit distribution. Capital - Xiao 1.7.2019 62,500 Capital - Yiheng 1.7.2019 62,500 Capital - Zhiwen 1.7.2019 31 250 Retained earnings Xiao 1.7.2019 43,750 Retained earnings - Yiheng 1.7.2019 37,500 Retained earnings Zhiwen 1.7.2019 25,000 Gross profit 700,000 Operating expenses 137,500 Salary due to Zhiwen 62,500 Drawings - Xiao 72,500 Drawings Yiheng 47,500 Drawings - Zhiwen 112,500 In addition Xiao made a short-term loan to the business of $45,000 on April 1 and Zhiwen invested a further $35,000 cash as Capital on June 30, 2020. iii. Required: Using 'T' account ledger format for parts i. - iii. i. Prepare the Profit and Loss Summary Account ii. Prepare the Profit Distribution Account Prepare the partners Retained Earnings Accounts iv. Prepare the Statement of Changes in Partners Equity QUESTION 3 Part A Profit and Loss Summary 30/6 30/6 Profit Distribution 30/6 30/6 30/6 30/6 Xiao, Retained Earnings 1/7 Balance $35 000 30/6 30/6 + Yiheng, Retained Earnings 1/7 Balance $30 000 30/6 30/6 30/6 QUESTION 3 Part B $ Mack and Hunt agreed to combine their businesses and form a partnership to trade as M&H Trading Ltd. The Balance Sheets for their respective individual trading operations are shown below. Mack Trading Co. Hunt Trading Co. Balance Sheet Balance Sheet As at November 1, 2020 As at November 1, 2020 Assets $ Assets Bank 6,000 Bank 8,000 Accounts Receivable 13,000 Accounts Receivable 7,000 Inventory 23,000 Inventory 12,000 Van 14,000 56,000 Premises 70,000 Total Assets 56,000 Total Assets Liabilities Liabilities Accounts payable 16,000 Accounts payable 7,000 Loan 5,000 21,000 Bank overdraft 7,000 Mortgage 45,000 Owners Equity 35,000 Owners Equity 97,000 59,000 38,000 The following terms were agreed to on formation of the partnership: Mack's Accounts Receivable were expected to realise $12,000 and the van had an agreed value of $10,000 Hunt's premises were taken into the partnership accounts valued at $85,000 and Hunt is to settle the bank overdraft herself Required; i. Prepare general journal entries to give effect to the above ii. Prepare the Balance Sheet of M&H Trading Ltd. as at November 1, 2020 QUESTION 3 Part B ii. M&H Trading Ltd Balance Sheet as at 1 November, 2020