QUESTION $3$

$(18$ marks$)$

Music Madness $($Pty$)$ Ltd $($hereafter$,$ MM$)$ is a company registered in South Africa, with a February year$-$end. MM sells high$-$end musical instruments and guitar strings.

Due to technology constantly changing it is vital for MM to make sure they always have stock of the latest and best quality guitar strings on hand.

MM purchase their guitar strings in batches and each batch consists of $10$ guitar string sets, which will be sold as $10$ individual items $($sets$)$ at a standard selling price of R$200$ per set.

The following inventory purchases transactions occurred during February $2023$:

$\backslash$table$[[$Date$,$Purchases,$\backslash$table$[[$Number of$],[$batches$]],$Total cost$],[08-$Feb,Cash purchase,$10,$R$9500],[09-$Feb,Purchases returns,$(5),($R$4750)],[10-$Feb,Credit Purchase,$25,$R$35750]]$

The following inventory sales transactions occurred during February $2023$:

$\backslash$table$[[$Date$,$Sales,$\backslash$table$[[$Number of string$],[$sets$]],\backslash$table$[[$Sales price per$],[$string set$]]],[03-$Feb,Cash sale,$(78),$R$200],[14-$Feb,Cash Sale,$(130),$R$200],[22-$Feb,Credit sale,$(152),$R$200]]$

$(360)$ string sets

MM had $150$ sets of guitar strings on hand on $1$ February $2023,$ these sets had a total cost of R$13500.$ On $28$ February $2023,$ a stock count was performed confirming that there were $90$ guitar string sets on hand.

Music Madness $($Pty$)$ Ltd uses the First$-$in$-$First$-$out $($FIFO$)$ costing method to value inventory in its perpetual inventory recording keeping system.

REQUIRED:

$3\mathrm{.}1$ Calculate the cost price per guitar string set on all the inventory purchase transactions that occurred during February $2023.$ Show all workings, and reference accordingly.

$(3$ marks$)$

$3\mathrm{.}2$ Prepare the general ledger account for inventory in the records of Music Madness $($Pty$)$ Ltd as at $28$ February $2023.$

Show all workings, and reference accordingly.

$(15$ marks$)$