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Construct a case for a trading company that adopts the perpetual inventory system and average cost assumption for its merchandising transactions
Construct a case for a trading company that adopts the perpetual inventory system and average cost assumption for its merchandising transactions.
In order to successfully capture the essence of merchandising transactions, you need to:
1. Prepare a schedule for the opening balances (You should assume the opening balances)
2. Use dates to order the transactions properly
3. The purchases should comprise 4 transactions with different cost per unit every time
4. Two sales transactions should be made; the first after the second purchase, and the second after the third purchase
5. Do not forget to record freight-in and freight-out charges for every transaction
6. Prepare a costing schedule
7. Post all transactions
8. Prepare the trial balance
First the numbers from you.
and then you should put the opening balance.
You must set dates for each transaction.
and place purchases transactions on 4 transactions at a different cost per unit at a time and two sales transactions are required their Order...
purchase
Purchase
Sales
Purchase
Sales
Purchase
And all transaction charges are charged and freight-in and freight-out and cost and trail balance are required
Expert Solution
| Refer answer working | ||||||
| Opening Balance | ||||||
| Fixed Assets | 1,00,000 | |||||
| Investments | 50,000 | |||||
| Debtors | 40,000 | |||||
| Cash & Bank | 45,000 | |||||
| Other assets | 50,000 | |||||
| 2,85,000 | ||||||
| Capital | 1,25,000 | |||||
| Loans & Advances | 1,00,000 | |||||
| Creditors | 35,000 | |||||
| Other expenses payable | 25,000 | |||||
| 2,85,000 | ||||||
| Purchase transaction details | ||||||
| Date | Quantity | Rate | Freight Rate | Total rate | Total Amount | |
| 01-01-2020 | 1000 | 10 | 1 | 11 | 11,000 | |
| 01-02-2020 | 1000 | 11 | 1 | 12 | 12,000 | |
| 01-03-2020 | 1000 | 12 | 1 | 13 | 13,000 | |
| 01-04-2020 | 1000 | 13 | 1 | 14 | 14,000 | |
| 50,000 | ||||||
| Sales Trasaction | ||||||
| Date | Quantity | Rate | Freight Rate | Total rate | Total Amount | |
| 15-02-2020 | 1000 | 11.50 | 1 | 12.50 | 12,500.00 | |
| 15-03-2020 | 1000 | 12.50 | 1 | 13.50 | 13,500.00 | |
| 26,000.00 | ||||||
| Inventory Valuation | ||||||
| Particulars | Date | Quantity | Rate | Freight Rate | Total rate | Total Amount |
| Purchases | 01-01-2020 | 1000 | 10.00 | 1.00 | 11.00 | 11,000.00 |
| Purchases | 01-02-2020 | 1000 | 11.00 | 1.00 | 12.00 | 12,000.00 |
| Total | 2000 | 10.50 | 1.00 | 11.50 | 23,000.00 | |
| Sales | 15-02-2020 | -1000 | ||||
| Balance | 1000 | 10.50 | 1.00 | 11.50 | 11,500.00 | |
| Purchases | 01-03-2020 | 1000 | 12.00 | 1.00 | 13.00 | 13,000.00 |
| Total | 2000 | 11.25 | 1.00 | 12.25 | 24,500.00 | |
| Sales | 15-03-2020 | -1000 | ||||
| Balance | 1000 | 11.25 | 1.00 | 12.25 | 12,250.00 | |
| 01-04-2020 | 1000 | 13.00 | 1.00 | 14.00 | 14,000.00 | |
| Closing Balance | 2,000 | 12.13 | 1.00 | 13.13 | 26,250.00 | |
| Trading Account | ||||||
| opening balance | 50,000 | sales | 26000 | |||
| purchases | 50,000 | closing balance | 76,250.00 | |||
| profit | 2,250 | |||||
| 1,02,250 | 102250 | |||||
| Trail Balance | ||||||
| Fixed Assets | 1,00,000 | |||||
| Investments | 50,000 | |||||
| Debtors | 66,000 | |||||
| Cash & Bank | 45,000 | |||||
| other assets | 50,000 | |||||
| Capital | -1,25,000 | |||||
| Loans & Advances | -1,00,000 | |||||
| Creditors | -85,000 | |||||
| Other expenses payable | -25,000 | |||||
| Purchases | 46,000 | |||||
| Sales | -24,000 | |||||
| Freight in ward | 4,000 | |||||
| freight outward | -2,000 |
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