ACCT10002 Sem 1 2017 Tutorial 4 Exercises - ACCT 10002...

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ACCT 10002: Tutorial 4 ExercisesQuestion 1 (PSA4.2)The Novelty Bookstore distributes hardback books to retail stores and extends credit terms of 2/7,n/30 to all of its customers. During the month of June the following inventory transactions occurred.June2 369151720 24262830Purchased 130 books on account for $6 each from Reader’s World Publishers,terms 1/7, n/30. Also made a cash payment to Classic Couriers of $60 for thefreight on this date.Sold 140 books on account to the Book Nook for $12 each.10 books returned to Reader’s World Publishers. Received $60 credit.Paid Reader’s World Publishers the amount owing.Received payment from the Book Nook.Sold 120 books on account to Read-A-Lot Bookstore for $12 each.Purchased 120 books on account for $6 each from Read More Publishers, terms2/7, n/30.Received payment of account from Read-A-Lot Bookstore.Paid Read More Publishers the amount owing.Sold 110 books on account to Readers Bookstore for $12 each.Granted Readers Bookstore $180 credit for 15 books returned costing $90. Thebooks were returned into inventory.Required:(a) Journalise the transactions for the month of June for The Novelty Bookstore, using a perpet-ual inventory system. Assume the cost of each book sold was $6.(b) What are the advantages and disadvantages for The Novelty Bookstore of using a perpetualinventory system as opposed to a periodic system?Question 2 (BE 5.4)Olynda Garden Centre accumulates the following data at 30 June:Inventory categoriesCost dataNet realisable valueNative treesPotting mixGarden statues$16 80012 60019 600$14 28013 30017 920Required:Calculate the lower of cost and net realisable value for Olynda’s total inventory.Page | 1 ACCT 10002: Introductory Financial AccountingTutorial 4 – Exercises

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