Question

Question 3
To reflect the tax-effect of the gain on revaluation, the required journal entry is:
a. Dr Income tax expense Cr Deferred tax liability
b. Dr Future income tax benefits Cr Deferred tax liability
c. Dr Deferred tax liability Cr Future income tax benefits
d. Dr Income tax expense Cr Gain on asset revaluation
e. Dr Gain of asset revaluation Cr Asset revaluation reserve

Question 12
Indigo Ltd uses the FIFO assumption with the periodic inventory method.
Units Unit cost         Total cost
Beginning inventory 12 $10         $120
Purchase 10 $12            $120
Purchase 6 $11       $ 66

Sales during year were 16 units. What was the value assigned to the closing stock of this item at the end of the period?

a. $66
b. $120
c. $138
d. $144

Question 18
Florida Inc uses a periodic inventory system with the weighted average method of cost assignment. The following data are available.
Date Units     Unit Cost Total Cost
Beginning inventory Jan 1 2000     $6 $12 000
Purchase Mar 13 4000     $7 $28 000
Purchase June 20 6000     $8 $48 000
Ending inventory Dec 31 1000

The cost of the ending inventory to the nearest dollar is:
a. $8333.
b. $8000.
c. $7300.
d. $6000.

Question 25
Nugyen Co purchased goods for $3500. While on display, the goods were damaged and it is estimated that they can now only be sold for $2000. Additional marketing and distribution costs are $100. The net realisable value of the goods is:

a. $1900.
b. $2000.
c. $3500.
d. $3400.

Answer 1

3) The overall double entry is:

• Dr Tax expense in Income Statement
• Cr Deferred tax liability in SFP

12)

	units	price	amount
opening jan 1	12	10	120
purchase	10	12	120
purchase	6	11	66
sales(FIFO)	12	10	120
	4	12	48

Closing stock 6 x12 + 6 x11 =138

18)

	Units	price	Total
Opening jan 1	2000	6	12000
Purchase march 13	4000	7	28000
purchase june 20	6000	8	48000
Total	12000		88000
Weighted Average price 88000/12000		7.3
Closing inventory	1000	7.3	7300

25) Esitamted selling price 2000 - estimates selling expense 100 = 1900

cost 3500 or nrv 1900 whichever is lower hence 1900