Task 1:

a) In Reid Supply company during September 2020, the following transactions and events

occurred

Sept. 4 Purchased 70 backpacks at $20 each from Hunter, terms 2/10, n/30.

Sept. 6 Received credit of $100 for the return of 5 backpacks purchased on Sept. 4 that were defective

Sept. 9 Sold 40 backpacks for $35 each to Oliver Books, terms 2/10, n/30.

Sept. 13 Sold 15 backpacks for $35 each to Heller Office Supply, terms n/30

Sept. 14 Paid Hunter in full, less discount.

Instructions Journalize the September transactions for Reid Supply using perpetual inventory system Prepare necessary T accounts, trail balance and an income statement for the month ended September 2020.

b) What are the differences between perpetual inventory system and periodic Inventory

system of recording merchandise operations?

c) What is FOB shipping point and FOB destination? Explain with examples.

d) What is the main difference between preparation of income statement under perpetual

inventory system and periodic inventory system?

Task 2:

a) At 1 May 2019 Troy company had 700 engines in inventory, valued at Tk. 190 each.

During the year ended 30 April 2020 the following transactions took place:

2019

1 July Purchased 500 engines at TK 220 each

1 November Sold 400 engines for TK 160,000

2020

1 February Purchased 300 engines at TK 230 each

15 April Sold 250 engines for 125,000

Required:

1) Suppose the company uses FIFO method. You are required to calculate the company's

closing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross

profit.

2) Suppose the company uses LIFO method. You are required to calculate the company's

closing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross

profit.

3) Suppose the company uses Weighted average method. You are required to calculate the

company's closing inventory of engines on 30 April 2020. Calculate cost of goods sold

and gross profit.

b) What are the assumptions behind FIFO, LIFO and weighted average methods? In case of

inflation, which method is the most suitable for determining ending inventory and cost of goods sold? In case of deflation, will your choice differ? Why?

Task 3:

a) Silenac Inc. is maintaining a Bank account in Orlando Bank Ltd. At the end of the month

December, 2017, the cash book of Silenac Inc. shows a Bank balance of Tk. 12,600. On the other hand, the bank statement covering the month of December shows an ending balance of Tk 13,995. The following additional information was obtained by Silenac Inc:

(1) A cheque paid to a vendor for Tk. 650 had been entered in the cash book as Tk. 860.

(2) Cash deposited to the Bank for Tk. 960 had been entered in the cash book as Tk. 690.

(3) A Transfer of Tk 720 from the account to another Bank account in Loyds Bank was not recorded in cash book. (4) Dividend received by Orlando Bank on behalf of Silenac Inc. for Tk. 120 was not informed to Silenac Inc. and yet to be recorded in the cash book.

(5) Cheque written in December but not charged to the December Bank statement for Tk. 870.

(6) Bank charges of Tk. 350 was not recorded in Cash Book.

(7) A standing order payment for Tk. 110 had not been entered in Cash Book.

(8) A cheque received from an old customer for Tk. 650 was deposited in the Bank for collection: however, it was returned by the bank marking "Not Sufficient Fund'

(9) Overdue interest charge of Tk. 70 was not yet recorded in cash book

(10) A customer directly deposited Tk. 2,000 in the Bank account which was not yet recorded in cash book

(11) The bank incorrectly charged a check of N Oil Co. for the amount of Tk. 175 to Silenac Inc. account

Required:

1) Prepare the Bank Reconciliation Statement for the month ended December 31, 2017 (6) 2) Prepare necessary adjusting entries on the books of Silenac Inc.

b) Briefly explain the necessity and purpose of preparing a Bank Reconciliation Statement.