Question 1

The following transactions relate to the businesses of L. Lakemba and F. Fairlight.

June

7 14 15 26

Lakemba sold goods to Fairlight for $3400. Terms were 2/10, n/30. Fairlight paid Lakemba the net amount due. Lakemba sold goods to Fairlight for $2470. Terms were 2/10, n/30. Fairlight paid for the goods.

Required

Prepare general journal entries to record the above transactions (a) for L. Lakemba and (b) for F. Fairlight. Both companies use a periodic inventory system. (Assume neither is registered for GST.)

Question 2

Use the following information from the records of Preston Partners to prepare an income statement under the periodic inventory system for the year ended 30 June 2017.

Purchases Inventory, 1 July 2016 Inventory, 30 June 2017 Selling and distribution expenses Sales Purchases returns and allowances Sales returns and allowances Administrative expenses Freight inwards Finance expenses

$

186 600 13 860 12 920 45 420 268 860 4 420 6 220 16 460 3 180 2 020