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Question 1 (3+2=5 Marks) Jamila Wholesale Company, Oman sells 225 pieces of Tables for a total amount of RO 11,250 to Fahad Furniture Company, Kuwait. The shipping terms are FOB Shipping point with the payment terms 2/30 EOM net 60. The Sales Invoice No. is 7254 and the customer Order No. 650; dated December 12 2019. Tables worth RO 1125 were returned by Fahad furniture company as tables were damaged during shipment. Required a) Draft the invoice prepared by Jamila Wholesale company to record the Sales. b) Draft the invoice prepared Fahad Furniture company to record the Purchases. Question 2 (3+2 =5Marks) a) Calculate the missing amount with the calculations (it is important that the question will only be marked based on your calculations): Beginning inventory Purchases 43.390 Purchase return and allowance (b) Net purchase 41,090 Freight in 2.240 Cost of goods purchased Cost of goods available for sale 49.530 Ending inventory 6.230 Cost of goods sold 43.300 b) Business decision makers prefer to record the information on sales returns and allowances on a separate account: i) Explain why a company's manager wants the accounting system to record customers' returns of unsatisfactory goods in the Sales Returns and Allowances account instead of the Sales account. (number of words required must not be less than 100 words). Question 3 (10 Marks) a) You want to know how promptly customers are paying their bills. This information can help you decide whether to extend credit and to plan your cash payments. Where do you find this information? Explain the details. b) Rectify the following errors: Credit purchases from Rahim RO 20000: i. Were posted to Rashid s account. ii. Were posted to debit of Rahim account. iii. A purchase of goods for RO 2000 has been wrongly debited to Furniture A/c. iv. A repair to Plant amounting to R01000 has been changed to plant and Machine A/C. v. A credit purchase of RO 560 from Faizal is recorded RO 650. (100-150 words) Question 4 (10 Marks) XYZ Corporation is a newly formed business that engages in the purchase and resale of cars. Purchases for the first year of operation were as follows: Date Purchases 7-Jan 50 units @ RO. 15,000 each 15-Mar 70 units @RO. 16,000 cach 16-Jun 30 units @ RO. 16,500 each 3-Aug 90 units @ RO. 17,000 each 11-Oct 25 units @ RO. 17,200 each Sales for this first year of operation amounted to 210 units and total RO. 4,250,000. Instructions: a) If XYZ uses the first-in, first-out (FIFO) inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gross profit? (3 Marks) b) If XYZ uses the last-in, first-out (LIFO) inventory method (periodic approach), what values would be assigned to ending inventory and cost of goods sold? How much is gross profit? (3 Marks c) Which of the above techniques produces the highest profit? Which of the above techniques reports the most "current" cost on a balance sheet? Which of the above techniques report the most "current" cost in measuring income? Which of the above techniques results in the lowest income tax obligation? Justify all your answers. (words required should be 50 to 100 words). (4 Marks) Question 5 (10 marks) The following are merchandising transactions of Stone Company, which applies the perpetual inventory system. Aug 1 Purchased merchandise from Abilene Company for RO. 6,000 under credit terms of 1/10, n/30, FOB destination. Aug 4 At Abilene's request, Stone paid RO. 100 cash for freight charges on the August 1 purchase, reducing the amount owed to Abilene. Aug 5 Sold merchandise to Lux Corp. for RO. 4,200 under credit terms of 2/10, n/60, FOB destination. The merchandise had cost RO. 3,000. Aug 8 Purchased merchandise from Welch Corporation for RO. 5,300 under credit terms of 1/10, n/45, FOB shipping point. The invoice showed that at Stone's request, Welch paid the RO. 240 shipping charges and added that amount to the bill. (Hint: Discounts are not applied to freight and shipping charges). Aug 9 Paid RO. 120 cash for shipping charges related to the August 5 sale to Lux Corp. Aug 10 Lux returned merchandise from the August 5 sale that had cost Stone RO. 500 and been sold for RO. 700. The merchandise was restored to inventory. Aug 12 After negotiations with Welch Corporation concerning problems with the merchandise purchased on August 8, Stone received a credit memorandum from Welch granting a price reduction of RO. 800. Aug 18 Paid the amount due Welch Corporation for the August 8 purchase. Instructions: a) Prepare Journal Entries to record the above transactions. (7 Marks) b) What is the process for posting to a subsidiary ledger and its controlling account? (number of words required must not be less than 100 words). (3 Marks) Question 6 (10 marks) In July, the following selected transactions were completed. All purchases and sales were on account. At the beginning of July, the ledger of the company showed Cash RO. 2,500, purchase RO. 1,700, Account Receivable RO. 2,000, and Accounts Payable RO. 2,200. The following transactions were completed during July. Date Transactions July 1 Purchased merchandise from XYZ Company RO.7,600 2 Received freight bill from Pegasus Shipping on XYZ purchase RO. 400 3 Made sales to Echo Company RO. 1.300 and to Pitas Bros. RO. 2.000 5 Purchased merchandise from Horizon Company RO. 3.200. 8 Received credit on merchandise returned to Horizon Company RO.300 13 Purchased store supplies from Bowe Supply RO.910. 15 Purchased merchandise from XYZ Company RO. 3,600 and from Goran Company RO. 3,300, 16 Made sales to Fiber Company RO. 3.450 and to Pitas Bros. RO. 1.570. 18 Received bill for advertising from Wei Advertisements RO. 600 21 Made sales to Echo Company RO. 310 and to Musky Company RO. 2.800. 22 Granted allowance to Echo Company for merchandise damaged in shipment R0 68, 24 Purchased merchandise from Horizon Company RO. 3,000 26 Purchased equipment from Bowe Supply RO.900. 28 Received freight bill from Pegasus Shipping on Horizon purchase of July 24, R0 380. 30 Made sales to Fiber Company RO. 5,600 Instructions a. Post to both the general and subsidiary ledger accounts. (7 marks) b. Discuss three functions of a Trial Balance

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