lalilu
ABFA1023 FUNDAMENTALS OF ACCOUNTING
1
Revision on Inventory Adjustments
New practice question
2 questions:
Does the good belong to us? o If yes, include in our closing inventory o If no, exclude from our closing inventory
Axis Trading Sdn. Bhd. is preparing their financial statements for the year ended 31 December 2010. Physical inventory count was done on 27
December 2010. The inventory count sheets totalled RM212,188. The draft
Statement of Profit or Loss showed a net profit of RM82,912. Axis sells goods based on a mark-up of 25%.
Has the good been included in our inventory count?
Upon further investigation, the following are discovered:
(a) Sales RM12,000 and purchases RM2,000 between inventory count.
(b) Goods delivered on “sale or return” basis on 1 December 2010 at the list price of RM25,000 have not yet been signified as sold.
(c) Received consignment goods RM50,000 on 29 December 2010.
(d) One inventory count sheet was overcast by RM950 and the other sheet was undercast by RM230.
(e) Sales on 28 December 2010 at invoice amount of RM12,500 are still waiting for collection by the customer. This invoice has not been entered into the Sales Journal.
ABFA1023 FUNDAMENTALS OF ACCOUNTING
(f) Returns to supplier amounting to RM1,050 on 26 December 2010 was omitted from the books.
(g) Inventory count sheet included inventories that were valued wrongly based on FIFO method totalling RM8,000, instead of the company policy of average cost method, which would have totalled RM6,500.
(h) Inventory count included some damaged goods, with historical cost of
RM19,000. Estimated repair cost of RM1,500 would enable these goods to be sold as spare parts at selling price of RM7,000.
Required:
i) Prepare a statement revising the closing inventories balance. ii) Calculate the revised net profit for the year ended 31 December 2010.
2
i)
Axis Trading Sdn. Bhd.
Statement of Adjusted Inventories as at 31 December
1
Revision on Inventory Adjustments
New practice question
2 questions:
Does the good belong to us? o If yes, include in our closing inventory o If no, exclude from our closing inventory
Axis Trading Sdn. Bhd. is preparing their financial statements for the year ended 31 December 2010. Physical inventory count was done on 27
December 2010. The inventory count sheets totalled RM212,188. The draft
Statement of Profit or Loss showed a net profit of RM82,912. Axis sells goods based on a mark-up of 25%.
Has the good been included in our inventory count?
Upon further investigation, the following are discovered:
(a) Sales RM12,000 and purchases RM2,000 between inventory count.
(b) Goods delivered on “sale or return” basis on 1 December 2010 at the list price of RM25,000 have not yet been signified as sold.
(c) Received consignment goods RM50,000 on 29 December 2010.
(d) One inventory count sheet was overcast by RM950 and the other sheet was undercast by RM230.
(e) Sales on 28 December 2010 at invoice amount of RM12,500 are still waiting for collection by the customer. This invoice has not been entered into the Sales Journal.
ABFA1023 FUNDAMENTALS OF ACCOUNTING
(f) Returns to supplier amounting to RM1,050 on 26 December 2010 was omitted from the books.
(g) Inventory count sheet included inventories that were valued wrongly based on FIFO method totalling RM8,000, instead of the company policy of average cost method, which would have totalled RM6,500.
(h) Inventory count included some damaged goods, with historical cost of
RM19,000. Estimated repair cost of RM1,500 would enable these goods to be sold as spare parts at selling price of RM7,000.
Required:
i) Prepare a statement revising the closing inventories balance. ii) Calculate the revised net profit for the year ended 31 December 2010.
2
i)
Axis Trading Sdn. Bhd.
Statement of Adjusted Inventories as at 31 December