Stevens Ltd is the leading retailer of Gym equipment. The following information occurred during May 2020. Stevens Ltd had an opening inventory balance of $8,400,000.

May

1 Returned to the suppliers $80,000 of the opening inventory and received cash.

12 Purchased additional inventory on credit from the supplier for $12,000,000.

18 Sold inventory for $6,000,000 cash (Cost price to Stevens Ltd $2,400,000).

19 Paid the suppliers the account from 12 May.

31 The closing stocktake at year-end revealed an inventory balance of $17,800,000.

Required:

1. Record the above information for the month of May 2020 in the general journal using the perpetual inventory method. Narrations are not required. Ignore GST. [6 marks]

2. Record the above information for the month of May 2020 in the general journal using the physical inventory method. Narrations are not required. Ignore GST. Journal entries should include the four closing entries to determine the cost of goods sold and ending inventory. [8 marks]

3. Present the Income Statement extract for Stevens Ltd using the periodic inventory method for the month ended 31 May 2020. [3 marks]

4. Briefly explain two advantages of the perpetual inventory method for Stevens Ltd. [2 marks]