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Q1:

XYZ Company uses a periodic inventory system. The beginning balance of inventory and the purchases made by XYZ during the month of July are given below:

Date	Description	Units	Unit cost	Total cost
July 01	Beginning inventory	500	$20	$10,000
July 18	Inventory purchased	800	$24	$19,200
July 25	Inventory purchased	700	$26	$18,200
	Total	2,000		$47,400

The XYZ Company sold 1,400 units during the month of July.

Required: Compute inventory on 31st July and cost of goods sold for the month of July using FIFO inventory costing method:

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Q2:

ALPHA Company reported the following year-end information:

Cash	$ 52,000
Short-term investments	12,000
Accounts receivable	54,000
Inventory	325,000
Prepaid expenses	17,500
Accounts payable	106,500
Other current payables	25,000

Instructions: 1- Explain the purpose of the acid-test ratio. 2- Calculate the acid-test ratio for ALPHA Company.

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Q3

Maia's Bike Shop uses the periodic inventory system and had the following transactions during the month of May:

May 3	Sold merchandise to a customer on credit for $600, terms 2/10, n/30. The cost of the merchandise sold was $350.
May 4	Sold merchandise to a customer for cash of $425. The cost of the merchandise was $250.
May 6	Sold merchandise to a customer on credit for $1,300, term 2/10, n/30. The cost of the merchandise sold was $750.
May 8	The customer from May 3 returned merchandise with a selling price of $100. The cost of merchandise returned was $55.
May 15	The customer from May 6 paid the full amount due, less any appropriate discounts earned.
May 31	The customer from May 3 paid the full amount due, less any appropriate discounts earned.

Instructions:

Prepare the required journal entries that Maia's Bike Shop must make to record these transactions.

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Q4:

What does FOB stand for? Differentiate between FOB shipping point (or FOB factory) and FOB destination?

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