QUESTION $3(34$ marks$)$

SunnySide Limited is a high$-$end sunglasses retailer that sources and sells exclusive

designs from global designers in South Africa.

Aviator Sunglasses: The following transactions occurred during October $2023$:

Date Transaction Units Amount per unit Total

Cost$/$Revenue

$1$ Oct Opening balance $220$ R$300$ R$66000$

$10$ Oct Purchase $380$ R$310$ R$117800$

$16$ Oct Sales for cash $(300)$ R$500($R$150000)$

$22$ Oct Purchase $180$ R$315$ R$56700$

$25$ Oct Returns of stock $(50)$ R$315($R$15750)$

$27$ Oct Purchase $140$ R$320$ R$44800$

$29$ Oct Sales for cash $(240)$ R$500($R$120000)$

$30$ Oct Sales returns $5$ R$500$ R$2500$

Additional information:

$$ An inventory count was performed on $31$ October $2023,$ and it was discovered that

$325$ Aviator Sunglasses remained. Of these $325$ sunglasses, $8$ sunglasses had

minor scratches and could be sold at a price of R$300$ after spending R$50$ on

polishing each. The company paid to have the scratches removed on $31$ October

$2023.$

$$ SunnySide Limited applies the periodic recording system and the weighted

average cost allocation method on inventory.

$$ SunnySide Limited makes use of the Profit and loss account, not the Trading

account.

$$ Ignore VAT and taxation for this question.

$$ The company only trades in cash transactions, no credit purchases$/$sales$.$

$$ Round to the nearest Rand.REQUIRED:

$3\mathrm{.}1$ Determine the cost per unit of the Aviator Sunglasses on $31$ October $2023$ by

applying the periodic recording system and the weighted average cost

allocation method. Please show all calculations.

$(7$ marks$)$

$3\mathrm{.}2$ Assume a weighted average cost of R$310$ per unit. Determine the closing

inventory value for the Aviator Sunglasses on $31$ October $2023,$ applying the

periodic recording system and the weighted average cost allocation method.

Please show all calculations.

$(7$ marks$)$

$3\mathrm{.}3$ Calculate the cost of sales expense for the Aviator Sunglasses for October

$2023.$ Assume a periodic recording system and the weighted average cost

allocation method. Please show all calculations.

$(3$ marks$)$

$3\mathrm{.}4$ Assume a financial year end of $31$ October $2023.$ Prepare all the necessary

journal entries to record the following transactions:

$$ Inventory movement for $27-30$ October $2023(10$ marks$)$

$$ Repairs on scratched sunglasses $(2$ marks$)$

$$ Inventory written down $(2$ marks$)$

Instructions:

Your journals must include dates. Narratives are not required. Apply the

periodic recording system and the weighted average cost allocation method.

Please show all calculations.

$3\mathrm{.}5$ Assume a financial year end of $31$ October $2023.$ Explain, in words, how you

would account for the loss on inventory in the books of SunnySide Limited for

the year ending $31$ October $2023.$ Include in your discussion the adjustment

journal entry that needs to be posted.

$(3$ marks