5 Inventories control ledger account balance at 31 May 20367.30 Accounts payable control ledger account balance at 31 May 7973.60 Inventories...

QUESTION ONE: Inventories

a)

Mario Yeppoon uses the perpetual method and balances the books at month-end. All sales and purchases are made on 2/10, n/30, FOB destination terms. The moving weighted average formula is used to assign cost to inventories.

The following information has been extracted from Mario's books and records for May and June2017.

Required:

What are the perpetual inventories records for June 2017. Set out your records in tables as illustrated in the Appendix to this assignment. The templates will also be provided as a separate word document accompanying this assignment. You may not need all rows. Opening inventories have already been entered.

b)

At 30 June 2017, Mario conducted a physical stocktake that found 14 pool filters and 26 pool pumps on hand. An investigation of discrepancies between the inventories card balances and the physical count showed that the 15 pool filters purchased on 29 June 2017 were still in transit from thesupplier's factory on 30 June 2017, and one pool pump, sold on 18 June, had been returned by acustomer on 30 June. No adjustment has been made in the books for the sales return. The customer had not paid for the returned pump.

Required:

What are the general journal entries necessary to correct the Inventories control general ledger account balance as at 30 June 2017. (Narrations are not required but show all workings.) Do not adjust the perpetual inventories records in Part A.

c)

On 30 June 2017, Mario determined that his inventories have the following net realisable values.

Pool filters $232 each Pool pumps $546 each

Required:

What action should Mario take as at 30 June 2017 with respect to these net realisable values? Explain why.