The accounting department of MNO Limited (MNO) provides two sets of data for June. The first data relates to the purchase, and the second data relat

Question 1 (10 marks)

The accounting department of MNO Limited (MNO) provides two sets of data for June. The first data relates to the purchase, and the second data relates to the sales.

Table 1. The First Set of Data - Purchases

1st June 1185 units @ 9

6th June 711 units @ 10

11th June 474 units @ 12

19th June 1185 units @11

28th June 158 units @ 13

The following data relates to the sales:

Table 2. The Second Set of Data - Sales

9th June 237 units @ 13

14th June 1422 units @ 13

24th June 553 units @ 15

Required:

A :- Based on the above information, calculate the following for the month of June 20X0:

Cost of goods sold (COGS)

B :- Cost of closing inventory

C :- The gross profit

Question 2

Credit Sales refer to therevenue earned by a company from its products or services, where the customer paid using credit rather than cash. JKL Limited (JKL) sells its products on credit. The table below presents the information relating to the selected accounts.

Table 1. Sales, A/R and Allowances for Doubtful Debts

Accounts receivable (balance 30 June 20X3) 120 805

Allowance for doubtful debts (credit balance 1st July 20X2) 555

Credit sales returns and allowances during the year 33 300

Credit sales during the year 395 900

In the past, the companys yearly bad debt expense had been estimated at 2% of net credit sales revenue. It was decided to compare the current method with an ageing of the accounts receivable method. The following analysis was obtained with respect to the accounts receivable.

Nature of A/R Age Balance % of estimated uncollectable

Not yet due 64 972 0.50%

Overdue 10-30 days 22 570 02%

31-60 days 16 280 10%

61-120 days 9 398 25%

121 days and over 7 585 40%

120 805

Required:

Prepare journal entries to adjust the Allowance for Doubtful Debts at 30 June 20X9 using the net credit sales method.

Prepare journal entries to adjust the Allowance for Doubtful Debts at 30 June 20X9 using the ageing of accounts receivable method.

Determine the balance in the Allowance for Doubtful Debts account under the net credit sales method.

Determine the balance in the Allowance for Doubtful Debts account under the ageing of accounts receivable method.

Question 3 On 1st January 20X1, WWW Limited (WWW) purchased new machinery for $210 560. WWW paid some directly attributable cost to bring this machinery into working condition. In particular, WWW paid the freight cost of $3 580 and the installation cost of $4 843. This machine is expected to have a useful life of ten years with a residual value of $2 106. The pattern of economic benefits from using this machinery is constant. Therefore, it is decided that the straight-line depreciation method will be used. Ignore GST.

Required:

A :- Determine the cost of the machine

B :- Assuming that year ends on 30 June, record the journal entry of depreciation expenses on 30 June 20X3

C :- Calculate the accumulated depreciation balance at the end of the fourth year

Question 4

Table 1 presents the information extracted from the accounting records and bank statement of GHI Limited (GHI) at 30 June 20X3.

Table 1.

The closing balance, as shown on the bank statement (Cr) 1 575

Cash receipts of 30 June which were deposited on 30th June did not appear on the bank statement. 792

Cheques recorded in the cash payments but not yet presented for payment to the bank. 589

Required:

Prepare the bank reconciliation statement at 30 June, 2010 disclosing the closing balance of cash at the bank.

Assume the same data as above, but assume further that the closing balance of the bank account shown on the bank statement is $1 575 Dr., i.e., the bank account is overdrawn). Prepare the bank reconciliation statement at 30 June, 20X3 disclosing the closing balance of cash at the bank.