17 Aug Prepare general journal entries to record the March 16 sale using the FIFO inventory valuation method and the LIFO inventory valuation method.
- Q1. Choose two accounting principles and two accounting assumptions and explain them in your word.
- Q2. Explain the concept of double entry system and its relationship with accounting equation.
Q3. Al-Ahmad Accounting Services completed these transactions in July:
a. Purchased office supplies on account, SAR 450
b. Completed work for a client on credit, SAR 1,500
c. Paid cash for the office supplies purchased in (a)
d. Completed work for a client and received SAR 800 cash
e. Received SAR 1,500 cash for the work described in (b).
f. Received SAR 3,000 in advance from a client for accounting services to be performed in September.
Prepare journal entries to record the above transactions. Explanations are not necessary.
Q4. Explain the purpose and the importance of the income statement, and prepare the income statement for ABC company based on the following information taken from the trial balance in 2021
Consulting revenue
- SAR100,000
Rental revenue
40,000
Supplies expense
10,000
Rent expense
60,000
Wages expense
30,000
Answer:
Q5. On October 1, Saad Co. sold merchandise in the amount of SAR 5,800 to Neom Co., with credit terms of 2/10, n/30. The cost of the items sold is SAR 4,000. Saad Co. uses the perpetual inventory system. On October 4, Neom Co. returns some of the merchandise. The selling price of the merchandise is SAR 1,500, and the cost of the merchandise returned is SAR 1,050.
Record the entry or entries that Saad Co. must make on October 4th.
Q6.
A. Explain in your own words four costing methods of inventory with a numerical example for each
B. A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.
January 1:
Purchased 550 units at SAR 55 per unit
February 5:
Purchased 350 units at SAR 65 per unit
March 16:
Sold 250 Units for SAR 85 per unit
Prepare general journal entries to record the March 16 sale using the FIFO inventory valuation method and the LIFO inventory valuation method.
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