Being cost of Couch acquisition paid(Cater, 2006). Question 4$$Date ParticularsDrCr1/October 2012Purchases240 000Bpple 240 000Being credit purchases of 300 iSLEEPS @800 from Bpple2/October 2012UNE200 000Sales 200 000Being Credit sales of 100 iSLEEPS @2000 to UNE4/October 2012Sales 10 000UNE10 000Being reduction in price for the 50 damaged units4/October 2012Bank190 000UNE 190 000Being cash received for the 100 iSLEEPS to UNE11/October 2012Bpple 240 000Bank 240 000Being payment for 300 iSLEEPS20/October 2012Purchases300 000Bpple 300 000Being credit purchases of 300 units @60023/October 2012 Bpple300 000Bank 300 000Being payment for the purchases of 300 units @6001/December 2012UWS750 000Sales750 000Being credit sale of 500units @15001/December 2012Carriage outwards1 000Cash1 000Being shipping costs to UWS paid in cash 11/December 2012 Bank750 000UWS750 000Being receipt from UWS for the credit purchases(JSU, 2000)Question 5PurchasedSold (Deducted)Balance of InventoryDateUnits Price AmountUnits Price AmountUnits Price Amount1/Oct/20122/Oct/201220/Oct/20121/Dec/2012300 800 240 000300 600 180 000100 800 80 000500 680 340 000300 800 240 000200 800 160 000500 680 340 0000 0COST OF GOODS SOLD 420 000WorkingsWeighted average cost is calculated as follows: Average Price per Unit = Total value of stocks / No of unitsOn 2/Oct/2012, Average cost per unit= $800, which is the unit price for the first purchase. On 1/Dec/2012, Average cost per unit =340 000 / 500= $680The Cost of Goods Sold therefore becomes: (80 000 + 340 000) = $ 420 000 (McGew & Media, 2000). Question 6The described lease is an operating lease because of the following reasons: The ownership of the car will not be transferred to the owner at the end of the lease term The period of the lease is very short.
For it to be a financial lease, the period should be more than 75% of the useful life of the car.
Since three out of 8yeaars is merely 38 per Cent, it becomes an operating lease. The lease does not contain a clause to enable Armidale limited to procure the car at lesser price than the fair price in the market. The residual value of the vehicle will still be very high when it is being returned by Armidale ltd. Question 7Rent expense is treated on a straight-line basis. AASB (2010) explains this in 33rd paragraph. Total lease payment = 5000 + 8000 + 8000 = 21 000.Payment per year = 21000/3 = 7 000Date ParticularsDrCrEntries relating to the year 11/July 2012Prepaid rent5 000Bank 5 00030/June 2013Rent expense7 000Accrued rent2 000Prepaid rent5000Entries relating to year 230/June 2013Prepaid Rent6 000Accrued rent2 000Bank800030/June 2014Rent expense7 000Prepaid rent6 000Accrued rent1 000Entries relating to the last year 330/June 2014Prepaid rent7 000Accrued Rent 1 000Bank 8 000ReferencesAASB.
(2010). AASB 117. Retrieved from http: //www. aasb. gov. au/admin/file/content102/c3/AASB117_07-04_ERDRjun10_07-09.pdfCater, M. (2006). Chapter 9: Property, Plant, and Equipment. Retrieved from http: //faculty. uml. edu/ccarter/Chapter9Part1.htmJSU. (2000). Perpetual vs. Periodic Inventory System Journal Entries. Retrieved from http: //ccba. jsu. edu/accounting/PERPETUALPERIODICJE. HTMLMcGew, M., & Media, D.
(2000). How to Do Weighted Averages in Inventory. Retrieved from http: //smallbusiness. chron. com/weighted-averages-inventory-22454.html