Question

29. Gears Ltd's goods in transit at December 31 include (1) purchases made FOB destination, (2) sales made FOB destination, (3) sales made FOB shipping point, and (4) purchases made FOB shipping point. Which items should be included in Gears Ldt’s inventory at December 31?

Question 29 options:

	(1) and (3)
	(1) and (2)
	(2) and (3)
	(2) and (4)
	None of the above.

30. Fantastic Fashions has just completed its first quarter of operations. Assume that Fantastic Fashions adjusts its book quarterly. Below are transactions that have not yet been recorded.

Jan 1 Made cash sales of $75,000 before tax. HST is collected on all sales at a rate of 13%.

Jan 15 Signed a six month note for $12,000 to extend amounts owing on account to Trendy Taste Inc. Interest is 6% annually and due at maturity.

Mar 1 Received the annual property tax bill for $7,500 payable on Apr 30.

Apr 1 Paid gross salaries of $10,000; of this amount $495 is CPP, $178 is EI and $3,465 is for income taxes.

Apr 30 Paid the property taxes bill in full.

The journal entry to record sales on Jan 1 is

Question 30 options:

Account receivable			84,750
	Sales			75,000
	Sales Tax Payable-HST			9,750

Cash			84,750
	Sales			84,750

Cash			84,750
	Sales			75,000
	Sales Tax Payable-HST			9,750

Cash			75,000
Sales Tax Payable-HST			9,750
	Sales			84,750

None of the above

31. Under IFRS, cash receipts from interest and dividends are classified as

Question 31 options:

	operating activities.
	investing activities.
	either operating or investing activities.
	either financing or investing activities.
	none of the above.

Answer 1

Question No.	Correct Option	Reason
29	Correct Option D i.e. (2) and (4)	Sales made on FOB destination is part of our inventory because ownership still lies with us. Purchase made FOB Shipping point is part of our inventory because ownership still lies with us
30	Correct Option C	Acounts NAME	Debit	Credit
		Cash	84750
		SALES		75000
		Payable-HST		9750
31	Correct Option C i.e. either operating or investing activities.