2 Question 2 Marks:

8.2Question 2Marks: 1Your client commenced business on June 1, 2011 using the perpetual inventory method AVCO, and, as it is now the end of the 2011 financial year, has provided the following records:June 1 commenced business with an inventory of 500 units @ $6 per unit (GST exclusive)June 4 sold 300 units for $3,300 on creditJune 7 sales returns of 5 units for $55June 10 purchased 700 units on credit for $5,390June 17 purchased 600 units on credit for $5,280June 18 sold 1200 units on credit for $14,520June 21 paid customs duty $330 on June 17 purchaseJune 24 purchased 400 units on credit for $4,400June 26 purchases returns 10 units for $110June 27 paid further import costs on June 17 purchase $200June 30 physical stock-take revealed 645 units on hand worth $5,940 (GST exclusive) Required: Calculate any variance between the accounting system value of inventory at June 30th and the results of the physical stock-take at the same date.Your client provides the following data (all GST exclusive)Inventory item: Mattress Inventory Qty: 250 Expected selling price: $100Cost of purchase: $54Selling cost: $2Freight outwards: $ 10Now answer question 3 and 4.Question 3Marks: 1Calculate the net realisable value of the inventory items:Answer:Question 4Marks: 1Explain why under current Australian Accounting Standards it is a requirement that the value of inventories must be stated at net realisable value if this is lower than cost.Answer:Your client had total sales of $100,000 (GST exclusive) and purchases of $72,000 (GST exclusive) in its first year of operation. At the end of the first year a stock take was conducted resulting in a figure of $16 000. The owner is not convinced that this is correct and undertakes a second stock take – resulting in a figure of $20,000.Now answer question 5, 6 and 7.Question 5Marks: 1Calculate the gross profit with closing inventories of $16 000 and $20 000Answer:Question 6Marks: 1Describe and explain the impact of underestimating and overestimating closing inventories on gross profit calculations for the current and next accounting periodAnswer:Question 7Marks: 1If the physical count value of inventory for the end of the period is $20,000 less than the closing value as per the accounts, what will be the required adjustment journal to correct the accounts?Answer:Question 8Marks: 1Purchases of inventory are recorded from appropriate documentation such as delivery notes, invoices from suppliers, purchase orders, purchase requisitions, etc. However the accounting transactions are different depending on whether the Perpetual or Periodic inventory accounting methods are used. Briefly explain the difference in accounting treatment of inventory purchases between the 2 inventory methods.Answer:Question 9Marks: 1Explain if, and how, GST impacts on the two inventory accounting methods, Perpetual and Periodic.Answer: