Question

Accounting for Retailing Business (40 Marks)
Fijiana Retailers Limited wants to know its accounting system better in terms of controlling the flow of
inventory in the business. The company wants to consider the two types of inventory system (Periodic and
Perpetual) to be implemented in the business because of the many advantages it posits in control over
inventories. The transactions occurred for the month of June, 2020. VAT is applicable at the rate of 10%.
Date Transactions
5
th June Purchases 500 units @ 0.80 cents plus VAT from CBA Ltd on account.
6
th June Sales 80 units @ $1.00 plus VAT to Birds Ltd on account.
9
th June Sales 100 units @ $1.50 plus VAT to Apex Ltd on account.
10th June Sales 150 units $1.00 plus VAT to Birds Ltd on account.
15th June Purchases 150 units @ 0.80 cents plus VAT.
28th June Sales 20 units @ $1.50 plus VAT to Lakes Ltd on account.
30th June Business Closed for Stock take
Other Information:
-Beginning Inventory 750 units @ 0.80 cents
- 30th June stock take revealed 1050 units @ 0.80 cents.
REQUIRED:
A. Prepare the general journal entries using both the inventory systems. (20 Marks)
B. Prepare an income statement extract till gross profit for both the systems. (10 Marks)
C. Prepare the stock card using FIFO and WAC method. (10 Marks)

Answer 1

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