Student name:

ACCT$122-$ Introductory Financial Accounting I

Assignment # $2-$ Chapters $5,6,7$ & $8$

Question $1-$ Gross Profit $(5$ marks$)$

The following reflects sales of AE Limited for the years $2023$ and $2024$:

$2023$

Net Sales $ $325,709$ $ Cost of Goods Sold $ $238,175$ $

$2024325,578200,055$

a$)$ Calculate the Gross Profit from sales for each year.

b$)$ Calculate the gross profit ratio for each year $-$ show your calculations! c$)$ InwhichyearwasthegrossprofitratiobetterforACMELimited? Answer in the space below

a$)$

b$)$

c$)$

Question $2-$ Merchandise Journal Entries $(10$ marks$)$

The following merchandise inventory transactions occurred in the month of December in the operations of Spectatre Enterprises The company uses a perpetual inventory system and records all purchase$/$sales discounts for early payment at the time of payment. Ignoring any sales$/$excise taxes, prepare the necessary journal entries for these transactions.

Dec $3$ Dec $8$ Dec $9$ Dec $13$ Dec $20$

Dec $26$ Dec $31$

Sold inventory costing $$3,392$ to AGN Corp on credit for $$4,837.$ Terms $1/10$ net $30.$ Purchased inventory costing $$6,640$ from AGN Corp on credit. Terms $5/10$ net $30.$

$$1,123$ of the merchandise sold on Dec $3$ to AGN Corp was returned for credit on account. AGN Corp paid their account for $$2,877$

Spectatre Enterprises discovered that $$875$ worth of merchandise is defective and returned it to AGN Corp for adjustment to the account.

Sent a payment to AGN Corp for the full amount.

At the end of December, the merchandise inventory account had a balance of $$83,460.$ A physical count was done, adding up to $$84,272.$

Use the general journal on the next page to record your entries. Show your calculations:

General Journal

Date Account Title and Explanation Debit Credit

Question $3-$ Merchandise Costing $(10$ marks$)$

Below is the purchase and sale history of a company's product, maintained under the First$-$In$,$ First Out method, following the perpetual approach:

Date

Jul $1$

Jul $6$

Jul$13$ Jul $23$

Required:

Transaction Units

$$/$Unit

Opening Balance

Purchase

Sale

Purchase $18$

$???$ $ $7\mathrm{.}01$

$49$ $ $4\mathrm{.}33$

$12$ $ $6\mathrm{.}35$

$53$

a$)$ Determine the balances for ending Inventory and Cost of Goods Sold for the month of July under the First$-$ In$,$ First Out method. Make sure you show all your work.

$(5$ marks$)$

Date Inventory Cost of Goods Sold

b$)$ How would your answer change if you used the Weighted Average method instead?

$(5$ marks$)$

Date Inventory Cost of Goods Sold

Question $4-$ Lower of Cost & Net Realizable Value $(11$ marks$)$

The Champion's Pet Store sells two categories of products, dishes $($large bowls and small bowls$)$ and food $($canned and fresh$).$ Their year$-$end of August $31,2023,$ is coming up$,$ and they wish to determine the balance sheet valuation of their inventory $($on the perpetual basis$).$

Product

Category Dishes

Dishes Food Food

# of Units $28$

$23411$

Cost NRV

$ $66$ $ $67$ $ $79$ $ $70$ $ $47$ $ $71$ $ $150$ $ $195$

Large Bowls Small Bowls Canned Fresh

Required:

a$)$ Calculate the Lower of Cost and Net Realizable Value for each product. Calculate the inventory value that should be reported on August $31,2023,$ based upon category values. $(5$ marks$)$

b$)$ Usingtheresultsfromparta$),$preparethejournalentrytoadjustinventoryto LCNRV$.(1$ mark$)$

c$)$ What would be inventory value, if the calculations were based upon total inventory values instead? $(5$ marks$)$

Show your calculations: a$)$

b$)$ & c$)$

Date Account Title and Explanation Debit Credit

Question $5-$ GST & PST $(4$ marks$)$

The bookkeeper of CMED Limited presented the following information for the month of August, $2022$:

Date: Aug $2$

Aug $26$

Business Event Purchased $$681\mathrm{.}00$ of inventory on account from Dentura Corp.

Sold $$152\mathrm{.}00$ of products to Billyz's Bakery on account, terms $2/10,$ net $30.$ Cost of the products are $$76\mathrm{.}00.$

Required:

Assuming that GST$=5\%$ and PST$=6\%,$ journalize the above transactions under

the perpetual inventory system. $(4$ marks$)$

Date Account Title and Explanation Debit Credit

Question $6$ Petty Cash $(3$ marks$)$

Using the information below, determine the appropriate Petty Cash transactions. Be sure to show all supporting work and calculations.

$01-$Mar$-20$ Established Petty Cash Fund of $$200\mathrm{.}00$ by drawing funds from Business Bank Acct.

$31-$Mar$-20$

Performed a month end count of the Petty Cash Box. The box contained the following:

Receipt for Office Supplies from Staples

Receipt for Gasoline for Company Vehicle Cash Left in Box

$$73\mathrm{.}55$

$$69\mathrm{.}22$ $$57\mathrm{.}53$

a$)$ b$)$

Required:

Prepare Journal Entry to establish Petty Cash Fund

Prepare Journal Entry at March $31,2020$ to replenish the Petty Cash Box to $$200\mathrm{.}00$

Account Title and Explanation Debit Credit

Date

Question $7$ Bank Reconciliation $(10$ Marks$)$

Using the information