ACCT2542
ACCT2542 – Week 1 – Self Study Module
Basic Journal Revision Questions & Solutions
The learning objectives for this self study are:
•
•
To test whether you have a solid understanding of basic journal entries and key concepts covered in ACCT 1501 to ensure that you are prepared for ACCT 2542.
To be able to work through the exercises WITHOUT looking at the solution. Once you have completed the exercises then check your work to the solution for accuracy.
Accounting for Inventory - (Reference: Trotman and Gibbins (2005) – Section 7.2, pp. 342-346)
Problem 7.8 – Trotman and Gibbins (2005)
Barber Ltd has the following data for a recent period:
$
12,000
30,000
46,200
7,000
5,500
Beginning inventory
Purchases (all credit)
Sales (all credit)
Ending inventory count
Operating expenses (all cash)
The company’s mark-up is 40% on cost
Assuming all purchases and sales were in single transactions prepare summary journal entries as well as closing entries using:
1. perpetual inventory
2. periodic inventory
1
Solution to 7.8
Barber Ltd
General Journal
(Perpetual Inventory Method)
$
30 000
Inventory
Accounts payable
$
30 000
Credit purchases during the period
Accounts receivable
Sales revenue
46 200
46 200
Sales on credit during the period
Cost of goods sold expense
Inventory
33 000
33 000
Cost of goods expense: 40% mark up - 46 200 x 100/140 = $33 000
Inventory shortage expense
Inventory
2 000
2 000
Shortage: Records show inventory should be $12 000 + 30 000 – $33 000 = $9000, but only $7000 on hand
Operating expenses
Cash
5 500
5 500
Expenses paid in cash
Profit and loss summary
Cost of goods sold expense
Inventory shortage expense
Operating expenses
40 500
33 000
2 000
5 500
Closing entry
Sales revenue
Profit and loss summary
46 200
46 200
Closing entry
Profit and loss summary
Retained profits
5 700
5 700
Transfer of net profit
2
Basic Journal Revision Questions & Solutions
The learning objectives for this self study are:
•
•
To test whether you have a solid understanding of basic journal entries and key concepts covered in ACCT 1501 to ensure that you are prepared for ACCT 2542.
To be able to work through the exercises WITHOUT looking at the solution. Once you have completed the exercises then check your work to the solution for accuracy.
Accounting for Inventory - (Reference: Trotman and Gibbins (2005) – Section 7.2, pp. 342-346)
Problem 7.8 – Trotman and Gibbins (2005)
Barber Ltd has the following data for a recent period:
$
12,000
30,000
46,200
7,000
5,500
Beginning inventory
Purchases (all credit)
Sales (all credit)
Ending inventory count
Operating expenses (all cash)
The company’s mark-up is 40% on cost
Assuming all purchases and sales were in single transactions prepare summary journal entries as well as closing entries using:
1. perpetual inventory
2. periodic inventory
1
Solution to 7.8
Barber Ltd
General Journal
(Perpetual Inventory Method)
$
30 000
Inventory
Accounts payable
$
30 000
Credit purchases during the period
Accounts receivable
Sales revenue
46 200
46 200
Sales on credit during the period
Cost of goods sold expense
Inventory
33 000
33 000
Cost of goods expense: 40% mark up - 46 200 x 100/140 = $33 000
Inventory shortage expense
Inventory
2 000
2 000
Shortage: Records show inventory should be $12 000 + 30 000 – $33 000 = $9000, but only $7000 on hand
Operating expenses
Cash
5 500
5 500
Expenses paid in cash
Profit and loss summary
Cost of goods sold expense
Inventory shortage expense
Operating expenses
40 500
33 000
2 000
5 500
Closing entry
Sales revenue
Profit and loss summary
46 200
46 200
Closing entry
Profit and loss summary
Retained profits
5 700
5 700
Transfer of net profit
2