How to Do Weighted Averages in Inventory - Math Problem Example

Accounting assignment Name Professor Course Accounting assignment Question 1 $ $ Date Particulars Dr Cr 31/June 2013 Rent expense 10 000 Bank account 10 000 Being rent paid for the month of June Question 2 $ $ Date Particulars Dr Cr 30/Sep 2012 Chuck 1800 Morgan 3000 Bank Account 4800 Being cash payable to Chuck and Morgan Question 3 $ $ Date Particulars Dr Cr 1/October 2012 Chinese Couch Designers 20 000 Couch design expense payable 20 000 Being receipt of Couch purchase invoice from Chinese designer 1/October 2012 American Couch Designers 2 000 Couch manufacture expense payable 2 000 Being receipt of Couch purchase invoice American manufacturer 1/October 2012 Truck driver 1 000 Installation costs payable 500 Transportation cost payable 500 Being invoice from truck driver 10/October 2012 Couch design expense payable 20 000 Couch manufacture expense payable 2 000 Installation costs payable 500 Transportation costs payable 500 Bank account 22 900 Purchases discounts 100 Being cost of Couch acquisition paid (Cater, 2006). Question 4 $ $ Date Particulars Dr Cr 1/October 2012 Purchases 240 000 Bpple 240 000 Being credit purchases of 300 iSLEEPS @800 from Bpple 2/October 2012 UNE 200 000 Sales 200 000 Being Credit sales of 100 iSLEEPS @2000 to UNE 4/October 2012 Sales 10 000 UNE 10 000 Being reduction in price for the 50 damaged units 4/October 2012 Bank 190 000 UNE 190 000 Being cash received for the 100 iSLEEPS to UNE 11/October 2012 Bpple 240 000 Bank 240 000 Being payment for 300 iSLEEPS 20/October 2012 Purchases 300 000 Bpple 300 000 Being credit purchases of 300 units @600 23/October 2012 Bpple 300 000 Bank 300 000 Being payment for the purchases of 300 units @600 1/December 2012 UWS 750 000 Sales 750 000 Being credit sale of 500units @1500 1/December 2012 Carriage outwards 1 000 Cash 1 000 Being shipping costs to UWS paid in cash 11/December 2012 Bank 750 000 UWS 750 000 Being receipt from UWS for the credit purchases (JSU, 2000) Question 5 Purchased Sold (Deducted) Balance of Inventory Date Units Price Amount Units Price Amount Units Price Amount 1/Oct/2012 2/Oct/2012 20/Oct/2012 1/Dec/2012 300 800 240 000 300 600 180 000 100 800 80 000 500 680 340 000 300 800 240 000 200 800 160 000 500 680 340 000 0 0 COST OF GOODS SOLD 420 000 Workings Weighted average cost is calculated as follows: Average Price per Unit = Total value of stocks / No of units On 2/Oct/2012, Average cost per unit = $800, which is the unit price for the first purchase. On 1/Dec/2012, Average cost per unit = 340 000 / 500 = $680 The Cost of Goods Sold therefore becomes: (80 000 + 340 000) = $ 420 000 (McGew & Media, 2000). Question 6 The described lease is an operating lease because of the following reasons: The ownership of the car will not be transferred to the owner at the end of the lease term The period of the lease is very short. For it to be a financial lease, the period should be more than 75% of the useful life of the car. Since three out of 8yeaars is merely 38 per Cent, it becomes an operating lease. The lease does not contain a clause to enable Armidale limited to procure the car at lesser price than the fair price in the market. The residual value of the vehicle will still be very high when it is being returned by Armidale ltd. Question 7 Rent expense is treated on a straight-line basis. AASB (2010) explains this in 33rd paragraph. Total lease payment = 5000 + 8000 + 8000 = 21 000. Payment per year = 21000/3 = 7 000 Date Particulars Dr Cr Entries relating to the year 1 1/July 2012 Prepaid rent 5 000 Bank 5 000 30/June 2013 Rent expense 7 000 Accrued rent 2 000 Prepaid rent 5000 Entries relating to year 2 30/June 2013 Prepaid Rent 6 000 Accrued rent 2 000 Bank 8000 30/June 2014 Rent expense 7 000 Prepaid rent 6 000 Accrued rent 1 000 Entries relating to the last year 3 30/June 2014 Prepaid rent 7 000 Accrued Rent 1 000 Bank 8 000 References AASB. (2010). AASB 117. Retrieved from http://www.aasb.gov.au/admin/file/content102/c3/AASB117_07-04_ERDRjun10_07-09.pdf Cater, M. (2006). Chapter 9: Property, Plant, and Equipment . Retrieved from http://faculty.uml.edu/ccarter/Chapter9Part1.htm JSU. (2000). Perpetual vs. Periodic Inventory System Journal Entries. Retrieved from http://ccba.jsu.edu/accounting/PERPETUALPERIODICJE.HTML McGew, M., & Media, D. (2000). How to Do Weighted Averages in Inventory. Retrieved from http://smallbusiness.chron.com/weighted-averages-inventory-22454.html Read More