Reference no: EM132874451
Question - Inventory recording methods - Apple Traders
April 1 Steve Jobs contributed cash of $200,000 and inventory of $630,000 to commence the operations of Apple Traders
April 2 Apple Traders purchased inventory from Intel Ltd for $168,000
April 5 Apple Traders returned goods that had cost $10,500 to Intel Ltd
April 15 Apple Traders paid the amount owing to Intel Ltd less 10% settlement discount.
April 17 Cash sales of $50,000 to AT&T (cost price 37,800) were made by Apple Traders.
April 21 Goods were returned to Apple Traders by AT&T for a cash refund of $4,000 (cost price $3,075).
April 22 Sold goods on credit to Best Buys for $80,000 (cost price $48,300).
April 29 Apple Traders received full settlement from Best Buys less 5% discount
April 30 A physical stocktake revealed inventory on hand of $693,000.
Required -
a) Record the above transactions and events in the general journal of Apple Traders. Use the perpetual inventory method of recording inventory.
b) Record the above transactions and events in the general journal of Apple Traders. Use the periodic inventory method of recording inventory.
c) Show the 'inventory' and 'cost of goods sold' ledger accounts for the perpetual method.
d) Prepare the Adjusted Trial Balance for the Periodic inventory recording method.
e) Show the Income Statement to Gross Profit for the perpetual inventory method for the month ended 30 April.
f) Show the Income Statement to Gross Profit for the periodic inventory method for the month ended 30 April.
g) Outline two advantages and two disadvantages of the perpetual and periodic methods of recording inventory.