Question

Q4. Malik Company uses a periodic inventory system. The beginning inventory of a particular product, and the purchases during the current year, were as follows:

Date	Transaction	Units	Price	Amount
Jan 1	Beginning inventory	60	$105	6,300
Mar 8	Purchase	30	$115
Aug 11	Purchase	90	$125
Oct. 23	Purchase	20	$135

At December 31, the ending inventory of this product consisted of 55 and selling price during year was $150. Using periodic costing procedures, determine the following under each (LIFO, FIFO and W. Avg.) of the flow assumptions:

(a) Cost of goods sold relating to this product and

(b) Cost of the year-end inventory

Q5. M/s. Sanders and sons purchased a machine on 1 Apr 2015 for $400000 from ABC & Co. and paid $100000 on its installation. The useful life of the machine is 3 years and its estimated residual value is $40000. On 31st March 2018, M/s. Sanders and sons sell the machinery for 250000.Charge depreciation as per the declining balance method @10 % p. a. Calculate

1. accumulated depreciation for every year and
2. loss/ profit earned by the firm after disposing off machine.
3. Make the journal entry for disposal of machine.

Answer 1

4		FIFO	LIFO	W. Avg. Cost
(a)	The cost of goods sold	$16,625	$17,925	$17,182.50
(b)	The ending inventory	$7,075	$5,775	$6,517.50
	FIFO
	Units	Unit Cost
	35	$125	$4,375
	20	$135	$2,700
	Ending Inventory		$7,075
	COGS = Beginning inventory + purchases - ending inventory
	=	$6.300 + $17,400 - $7,075
	=	$16,625
	LIFO
	Units	Unit Cost
	55	$105	$5,775
	Ending Inventory		$5,775
	COGS = Beginning inventory + purchases - ending inventory
	=	$6.300 + $17,400 - $5,775
	=	$17,925
	W. Avg. Cost
	Units	Unit Cost
	60	$105	$6,300
	30	$115	$3,450
	90	$125	$11,250
	20	$135	$2,700
	200		$23,700
	W. Avg. cost per unit		$118.50
	Ending Inventory		$6,517.50
	(55 x $118.50)
	COGS = Beginning inventory + purchases - ending inventory
	=	$6.300 + $17,400 - $6,517.50
	=	$17,182.50
5
a.	Declining Balance Method
	Year	Book Value beginning	Depreciable Value	Depreciation Rate	Depreciation Exp.	Acc. Dep	Book Value year-end
	2015	$500,000	$460,000	7.50%	$34,500	$34,500	$465,500
	2016	$465,500	$425,500	10.00%	$42,550	$77,050	$422,950
	2017	$422,950	$382,950	10.00%	$38,295	$115,345	$384,655
	2018	$384,655	$344,655	2.50%	$8,616	$123,961	$376,039
b.	$126,039	Loss
Date	Account Title and Explanation	Debit	Credit
March 31, 2018	Cash	$250,000
	Accumulated Depreciation	$123,961
	Loss on disposal	$126,039
	Equipment		$500,000