Financial Accounting DM 102 Improvement Test 9th September, 2019

Duration: 60 Minutes Total Marks: 30

Q1. The trial balance for a company as of December 31, 2018 is as follows:

List of Ledgers (Trial Balance) Amount ($)

Cash 58,000
Accounts receivable 1,20,000
Notes receivable (due in 90 days) 2,10,000
Office supplies 22,000
Trucks 1,34,000
Accumulated depreciation – Trucks 58,000
Equipment 2,70,000
Accumulated depreciation Equipment 2,00,000
Land 1,00,000
Accounts payable. 1,34,000
Interest payable 20,000
Salaries payable 28,000
Unearned delivery fees 1,20,000
Long-term notes payable 2,00,000
Common stock 15,000
Retained earnings 1,10,000
Dividends 50,000
Delivery fees earned 6,11,800
Interest earned 34,000
Depreciation expense-trucks 29,000
Depreciation expense-equipment 48,000
Salaries expense 74,000
Wages expense 3,00,000
Interest expense 15,000
Office supplies expense 31,000
Advertising expense 27,200
Repairs expense-trucks 35,600

Required: Use the information in the adjusted trial balance to prepare

(a) Statement of profit and loss the year ended December 31, 2018,

(b) The Balance Sheet as of December 31, 2018.

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Taj Palace uses a Periodic inventory system. It entered into the following calendar year 2018 purchases and
sales transactions. The company follows FIFO method.

Date Activities Units Acquired at Cost Units Sold at Retail

Jan. 1 Beginning inventory 600 units @ $45.00 per unit
Feb. 10 Purchase 400 units @$42.00 per unit
Mar. 13 Purchase 200 units @$24.00 per unit
Mar. 15 Sales 800 units @$75.00per unit
Aug. 21 Purchase 100 units@ $50.00 per unit
Sept. 5 Purchase 500 units @ $46.00 per unit
Sept. 10 Sales 600 units @$75.00 per unit
Totals 1,800 units 1,400 units

Required
1. Compute the COGS and Gross profit by using FIFO
2. Compute cost of goods available for sale using FIFO and compare it with that calculated using LIFO.

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