Diploma in Business/ Accounting

Course:
Unit Title: Maintain inventory records Unit: No in Matrix BSUBA-1-0030-2-4

Document No: Unit 30- GA1 SSS matrix code: Unit 30

Date issued: 21-11-21 Date of Submission: 5-12-21

National ID
Trainee Name
Learner Assessment Submission and Authenticity Declaration:

I certify that the evidence submitted for this assignment is my own. I have clearly referenced any sources used
in the work. I understand that false declaration is a form of malpractice and will result to a disciplinary action
which may lead to a re-submission of the Graded Assessment (GA), a failure in the GA or expulsion from the
College.

Trainee name: …………………………………………………… Date:……………………………………………………...

Purpose
This unit covers the learning outcomes, skills and knowledge required to reconcile inventory records
to general ledgers, record inventory flows, prepare schedules and produce reports.

Learning Outcomes & Skills Scope Covered

Performance Criteria Skills Scope

1-Process inventory purchases

1.1 Record inventory purchases from appropriate 1. Inventories may include:
documentation in subsidiary ledger a) Raw materials
1.2 Maintain periodic and perpetual records of b) Work in progress
inventory c) Finished products
d) Plant and machinery spares
2. Record inventory flows e) Consumables and purchases necessary to
2.1 Apply inventory flow assumptions as conduct the business of an organization
appropriate 2. Documentation may include:
2.2 Value inventory using appropriate valuation a) Delivery reports
rules b) Invoices from suppliers
c) Purchase orders
3. Reconcile inventory records to general ledgers d) Purchase requisitions
3.1 Reconcile all inventory records to ledgers 3. Inventory flow assumptions may include:
3.2 Identify and action discrepancies
a) Calculations based on gross margins
4. Prepare inventory schedules b) Cost
4.1 Develop and document schedules of inventory c) Net realizable value
turnover 4. Inventory valuation rules may include:
4.2 Prepare spreadsheets a) First in, first out
4.3 Report on inventory status b) Last in, first out
c) Weighted average

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 5. Costs may include:
a) Opportunity costs
5. Apply financial approaches to inventory control b) Storage costs
5.1 Analyze costs of holding inventory in light of c) Bank interest (if stock purchased through
current position loans)
5.2 Calculate turnover rates d) Insurance costs
5.3 Analyze re-ordering levels, timings of and e) Unsold or obsolete stock
payments for purchases f) Deterioration or perishing of stock
5.4 Determine optimum inventory levels
5.5 Report on financial implications and make
recommendations for change

Equipment, tools or resources needed

Computer, Internet, Excel.

Description of Activity

Complete these activities by using the information and tasks

Tasks:

Part A.1: FIFO, LIFO and average cost method in periodic inventory system

Jeddah Company uses a periodic inventory system. The beginning balance of inventory and the
purchases made by Jeddah Company during the month of July are given below:

Date Description Units Unit cost Total cost

1st July Beginning inventory 600 SAR20 SAR12,000

14th July Inventory purchased 750 SAR24 SAR18,000

23rd July Inventory purchased 650 SAR26 SAR16,900

Total 2,000 SAR46,900

The Delta Company sold 1,400 units during the month of July.

1. Calculate inventory on 31st July and cost of goods sold for the month of July using following
inventory costing methods (PCs 1.2, 2.1, 2.2)

a. First in, first out (FIFO) method

b. Last in, first out (LIFO) method

c. Average cost method

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Part A.2: FIFO and LIFO under periodic and perpetual system

Atia Foundation Company reveals the following information for the month of December 2020

2nd December Beginning inventory 300 units at SAR2.5

7th December Sales 200 units at SAR6

9th December Purchases 800 units at SAR3

16th December Sales 500 units at SAR3

18th December Purchases 500 units at SAR4

21st December Sales 300 units at SAR7

Required: ( PCs 1.2, 2.1, 2.2)

1. Assume Atia Foundation Company uses periodic inventory system, calculate ending inventory;
cost of goods sold; and gross profit under

(a). FIFO
(b). LIFO

2. Assume Atia Foundation Company uses perpetual inventory system, calculate ending inventory;
cost of goods sold (COGS), and gross profit under

(a). FIFO
(b). LIFO

3. Explain the reason of higher gross profit under FIFO than LIFO?

Part B: Calculating stock control indicators

The following is a profile of a Her IT – a small but successful retailer of laptops and tablets in Jeddah.

From this information

1. Calculate the following for each of the two years ( PCs 4.2,5.3,4.1,5.3,5.1,5.2,5.4)

a. Danger Level

b. Average Level of stock

c. Cost of Goods Sold

d. Stock Turnover

e. Re-order level

f. Optimum inventory level

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 2. Select and closely analyse any five of these levels and ( PCs 3.2, 4.3, 5.5)

a. Comment on the five changes in 2020 (choose five values and describe the case)

b. Make recommendations about improvements needed ( for example- Just in time )

Item 2019 2020

Maximum consumption per day 40 items 60
Minimum consumption per day 20 items 40
Re-order period 8 days 12
Reordering Quanitity 45 50
Average Consumption 30 50
Stock at start (SAR) 23000 16000
Stock at end (SAR) 26000 14000
Purchases (SAR) 87000 98000
Carriage inward (SAR) 6000 7100
Holding costs per item (SAR) 5 8
Sales 340000 350000

Part C: Processing Inventory Records

Ali’s Guitars
Mr Ali operates a small business, Ali’s Guitars in Jeddah, selling acoustic and electric guitars. Mr Ali’s
accountant maintains a double entry accrual accounting system with control accounts for Debtors,
Creditors and Stock and Subsidiary Records.
The business uses a perpetual inventory recording system with the FIFO (First In, First Out) stock
costing method.
The business prepares financial reports on an annual basis at 31 December each year.
At 31 March 2020 an examination of stock records indicated a stock loss and the need to write down
the value of one item.
On 3 April 2020 the following invoice was received with a delivery of stock that included a new
model of guitar – Gibner Acoustic Deluxe.

Gibner Ltd

1340 the Corniche

Jeddah Kingdom of Saudi Arabia
Invoice No.: GL23
To: Ali’s Guitars
Date 1/3/2020
Item Quantity

Unit Cost Value

SAR SAR
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Gibner Electric 12 250 3 000
Gibner Acoustic 15 120 1 800
Gibner Acoustic Deluxe 20 150 3 000
7 800

Freight charge 47 30 1 410

9 210

+ Insurance on delivery 1 180 180

Total due 9 390

Terms: Net 30 days

The following transactions also occurred during April 2020.

7 April – Sold 8 Gibner Acoustic Deluxe guitars to Abdul’s Music School for SAR350 plus SAR35 GST
each on credit (Invoice GG65). Dr AR

Cr Sales revenue

9 April – Abdul’s Music School returned 1 guitar because it was damaged (Credit Note 7). On
inspection Mr Ali discovered 3 other Gibner Acoustic Deluxe guitars were also damaged.

10 April – Mr Ali returned the damaged guitars and received a full credit (Credit Note 145). Dr AP, Cr
Purchase return

Using the information contained in the above table,

1.Calculate the following ( PCs 4.3, 3.2,1.2, 1.1, 3.1)

a. Total value of stock on hand at 31 March 2020

b. Value of the stock write-down for the item Gibner Acoustic. Because some economic
reasons the cost of the item reached 100 instead of 120. However, there were 15 units in
the inventory

c. Prepare the General Journal entry required to record the stock write-down

2. Record the appropriate information from the invoice above into

The appropriate Journals

1. The Stock Card for Gibner Acoustic Deluxe & for Gibner Electric guitar

2. Record the transactions into the appropriate journals for Ali’s Guitars in April 3transaction
(April )

3. Post the journal totals for April to the ledger ( create T Account )

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 When you complete the assignment, save the document with the filename:
Level-Specialization-Unit number-[Student name ]-[ID]

Make sure to:

1. Submit the assignment on time
2. Follow accurate spelling, punctuation and grammar

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 Diploma in Business-Accounting
Course:
Unit Title: Maintain inventory records Unit No. 30
Trainee Name Trainee ID

Grade

Grading Criteria

GRADE D – The trainee has mainly copied and taken information from sources with no
Achieve
reference available and there are spelling and grammatical errors throughout PC
d
The trainee has: 1.1
60-70% entries are accurate 1.2
60-70% entries are accurate 2.1
60-70% entries are accurate 2.2
60-70% entries are accurate 3.1
accurately costed stock write down & dealt with it in ledger 3.2
60-70% entries are accurate 4.1
100% of stock indicators and changes in part B calculated with 60% accurately in a spreadsheet 4.2
100% of stock indicators and changes in part B calculated with 60% accurately in a spreadsheet 4.3
Made comment about holding costs in commentary in part B 5.1
Accurately calculated turnover rate 5.2
100% of stock indicators and changes in part B calculated with 60% accurately in a spreadsheet 5.3
100% of stock indicators and changes in part B calculated with 60% accurately in a spreadsheet 5.4
Made comment and recommendations about implications about 2 indicators/levels in 5.5
commentary in part B

GRADE C – The trainee has taken information from sources with but referenced where required
and there basic spelling and grammatical errors throughout Achieved

70-80% entries are accurate

100% of stock indicators and changes in part B calculated with 70% accurately in a spreadsheet
Made comment and recommendations about implications about 3 indicators/levels in commentary in
part B

GRADE B – The trainee has used good use of information from other sources which is correctly
referenced with limited spelling and grammatical errors in places. Achieved

The trainee has: handed the assignment on time and completed everything in grade C plus:
80-90% entries are accurate
100% of stock indicators and changes in part B calculated with 80% accurately in a spreadsheet
Made comment and recommendations about implications about 4 indicators/levels in commentary in

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part B

Grade A
 90-100% entries are accurate
 100% of stock indicators and changes in part B calculated with 100% accurately in a
spreadsheet
 Made comment and recommendations about implications about 5 indicators/levels in
commentary in part B

Assessor Feedback

Assessor Signature: ………………………………………………………..Date:…………………………………….….

Student signature: ………………………………………………………….Date:……………………………………..…

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Appendix 1: Documents

GENERAL JOURNAL
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
SAR SAR SAR SAR

Stock Card: Item – Gibner Acoustic Deluxe

Date Details IN OUT BALANCE
Qty Unit Total Qty Unit Total Qty Unit Total
Cost Cost Cost Cost Cost Cost
SAR SAR SAR SAR SAR SAR

Stock Card: Item – Gibner Electric

Date Details IN OUT BALANCE
Qty Unit Total Qty Unit Total Qty Unit Total
Cost Cost Cost Cost Cost Cost
SAR SAR SAR SAR SAR SAR

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PURCHASES JOURNAL
Date Creditor Inv. No. Stock Control Total Creditors

GENERAL JOURNAL
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
SAR SAR SAR SAR

SALES JOURNAL
Date Debtor Inv. No. Cost of Sales Sales GST Total Debtors

GENERAL JOURNAL
Date Particulars General Ledger Subsidiary Ledger
Debit Credit Debit Credit
SAR SAR SAR SAR

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