Solution-Final-F08

# Solution-Final-F08 - CONCORDIA UNIVERSITY DEPARTMENT OF...

This preview shows pages 1–4. Sign up to view the full content.

CONCORDIA UNIVERSITY FINANCIAL ACCOUNTING DEPARTMENT OF ACCOUNTANCY COMM 217 ALL SECTIONS SUGGESTED SOLUTION FINAL EXAMINATION Fall 2008 Question 1 (21 marks) Multiple-choice (1.5 marks per correct answer) 1. c 2. c 3. c 4. b 5. b 6. d 7. a 8. c 9. d 10. c 11. b 12. b 13. c 14. d

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
QUESTION 2 (20 marks) Req. 1 (5 marks) # units Unit Cost Total Cost Beginning inventory Jan. 1 5,000 \$1.40 7,000 Purchase March 5 5,000 \$1.60 8,000 Purchase Sept. 30 2,500 \$2.00 5,000 Total available for sale 12,500 20,000 Weighted Average Cost = \$20,000 / 12,500 units = \$1.6 per unit Ending inventory (periodic, WAC): Number of units on hand = units available for sale – units sold = 5,000 + 5,000 + 2,500 – 8,000 – 2,500 = 2,000 units Cost of the ending inventory = 2,000 x \$1.6 = \$3,200 Cost of goods sold (periodic , WAC): Number of units sold = 8,000 + 2,500 = 10,500 COGS = 10,500 x WAC = 10,500 x \$1.6 = \$16,800 Or COGS = Cost of goods available for sale – Ending inventory = \$20,000 – \$3,200 = \$16,800 Gross profit (periodic, WAC) : Sales = ( 8,000 x \$4.50) + (2,500 x \$4.80) = \$36,000 + 12,000 = \$48,000 Gross profit = Sales – COGS = \$48,000 – 16,800 = \$31,200 Req. 2 (2 marks) The gross profit will be higher if Janet Corporation used the FIFO method. The reason is that the weighted-average cost method produces a higher cost of goods sold than FIFO when unit costs are rising. Req. 3 (5 marks) (a) March 5 Purchases . ...................................................................................... 8,000 Cash (5,000 x \$1.60). .............................................................. 8,000 (b) June 21 Cash . .............................................................................................. 40,680 Sales (8,000 x \$4.50 ). ............................................................ 36,000 GST payable (\$36,000 x 5%). ................................................. 1,800 PST payable (\$36,000 x8%). .................................................. 2,880 Req. 4 (4 marks) 2
The journal entries for transactions (a) and (b) will be different from those above if Janet Corporation uses a perpetual inventory system and the moving weighted-average cost method (1 mark). The differences are as follows: 1. For transaction (a), purchases would be debited to the “Inventory” account instead of the

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## Solution-Final-F08 - CONCORDIA UNIVERSITY DEPARTMENT OF...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online