MA Chapter 5 Questions Ordering and Accounting for Inventory
58 Comments
H
Henry·
Under Weighted average cost is it cumulative WAC only that we have to know or will be tested also on Periodic Weighted Average Cost ?
J
John MoffatTutor·
You can be tested on the periodic weighted average cost (although it is les likely)
H
Henry·
80%
M
Michelle·
100!
S
Saki khan·
How answer is 410
D
Darwish·
because its using LIFO method..LAST IN FIRST OUT (50x6.00)+(20x5.5)
A
Ahmad Firdaus·
It is not final balance.
J
John MoffatTutor·
The question does not ask for the final balance.
S
Siddharth·
The Goods Dispatched note is issued by a supplier to confirm that the delivery has started, i dont exactly get how its raised internally.
M
mrjonbainModerator·
It's created when goods are sent to your customers. When you make a supply. This helps internally with inventory Management.
S
Siddharth·
Ohh okay, I was thinking in the customer point of view assuming I am the receiver of goods
N
Nayana·
100%
J
John MoffatTutor·
Well done :-)
D
Duong·
Question number 3 asks: documents would be received from a supplier, Does "a supplier" here means the "purchasing department"?
J
John MoffatTutor·
No - the supplier is the other company that we are buying the goods from.
D
Duong·
So the documents they receive are the ones prepared by the purchasing department or the goods receiving department? Thank you!
J
John MoffatTutor·
No, they are the documents that the supplier sends with the goods.
L
Lalan·
In the first question, it is asking which department is resonsible for completing the purchase requisition, it can be raised by the department that requires the goods but isn't it the duty of the purchase department to complete the requsition by reviewing and ordering the materials from the requistion note? Isn't here asking for the completion of the purchase requistion note? The department that requires the goods can raise the requisition note but it will be completed by the purchasing department after issuing the purchase order form, isn't it?
J
John MoffatTutor·
No. As explained in our notes and lectures, the requisition is prepared by the department that wants the goods. The purchase department might well check it (but this is not 'completing it' - there is nothing to complete), but they will then prepare the purchase order.
M
Mannan·
when finished goods are dispatched to customers, a purchase invoice is also sent to the customers?
J
John MoffatTutor·
Yes, but it does not have to be at the same time.
M
Mannan·
Whom does the supplier create a goods dispatched note for?
J
John MoffatTutor·
It is sent to the customer along with the goods.
S
Sayeda Amal·
Is good inwards department the same as stores department or is it different for some companies?
J
John MoffatTutor·
They could be two separate departments. Goods inwards checking what arrives and then passing it to stores.
S
Sayeda Amal·
I've got it. Thank you Sir.
J
John MoffatTutor·
You are welcome :-)
F
Fred·
Sir when using the LIFO I though I should be valued by the olderst available inventory. please explain sir
J
John MoffatTutor·
If you are referring to question 4, then it does not ask you to value the inventory.
J
John MoffatTutor·
You are welcome :-)
J
John MoffatTutor·
No. The supplied would keep the goods despatch note. it is prepared by the department that despatched the goods. One copy will be kept in that department and another copy will be sent to the accounts department so that they can then prepare the invoice.
A
Asif·
Why dont they just keep a copy of the DN for themselves whilst also sending one to the customer. If there are a difference in the content between an GDN & DN, what significant difference could be there that the GDN could not be sent to the customer, or the DN copy could not replace the GDN for internal use ?
Z
Zvikomborero Sigauke·
hi , on question 4 the solution you gave does not include the issue on 13 August so I think the answer should be $385 which is 10*$6+50*$5.50+10*$5
J
John MoffatTutor·
The solution is correct. The question does not ask you to calculate the inventory, it asks for the value of the issue on 29. August.
O
olga·
mr John Moffat have yet understood how you got the value of the issue on 29. August. Please help show a more clear working. Thank you
J
John MoffatTutor·
The workings appear on the screen after you have submitted your answers and then click 'review quiz'.
M
Masibo Saisi·
Thank you truly for all of the work that you do at open tuition
J
John MoffatTutor·
Thank you for your comment :-)
H
Haminat·
I can't believe i am receiving this quality of lecture for free.Thank you very much open tuition for your generosity
J
John MoffatTutor·
Thank you for your comment :-)
S
ssatija·
100% , feeling good. ?
J
John MoffatTutor·
Great :-)
H
hansiezefy·
On the LIFO question isn't the answer supposed to be $465?
The first issue would be deducted from the opening bal leaving 60 units
The second issue of 70 would be taken 50 units from 26th August and 20 units from 14 August
That leaves remaining inventory of (60 @ $5) + (30 @ $5.5) = $465
S
Syed·
yes even Im having the same problem how is it not $465 (question 4)
J
John MoffatTutor·
The question is not asking you to value the closing inventory (in which case what hansiezefy has written would be correct).
The question is asking for the value of the issue on 29 August, and the pop-up answer is correct.
E
elvis1994·
The answer is rather $410, LIFO >>> (50@6=$300), ([email protected]=@110)>>> $300+$110=$410
J
John MoffatTutor·
Which is what the pop-up answer has written :-)
X
xingchen98·
You are asked to find value of the issue on 29 August (it is 70 units). As LIFO is last in first out, you need to identify the cost of this remaining inventory by the cost of last receipts. For example, the cost of last receipt on 26 August is $6 per unit, but it is not enough for 70 units because there only 50. That's why, from 50 receipts on 14 August which is $5.50 per unit cost, we take the cost of 20 units in order to find the value of 70 remaining inventory. Finally, (50*$6.00)+(20*$5.50)=$410
J
John MoffatTutor·
Yes, that is the correct answer (as the answer to the test says) :-)
A
aftab·
hi john can you please explain me LIFO/WEIGHT AVERAGE MESSAGE AGAIN..I DIDNT UNDERSTAND WELL .PLEASE HELP US THE EASY WAY
J
jubairahmed·
The LIFO question is confusing me. I'm not sure from the answers whether you worked out using FIFO rather than LIFO. Also, I got a closing inventory of '90' (100-40+50+50-70) rather than the '70' on the answers. Unless I am misunderstood?
J
John MoffatTutor·
The answer has been worked out using LIFO.
Also, the question does not ask for the value of the closing inventory. It asks for the value of the issue on 29 August, and the issue was of 70 units. 50 of them were from the most recent purchase and the other 20 were from the one before.
N
nataliamarsh·
to find out CWAC I can't understand why we get 875 but not 775 because 40*5=200
200+575=775
why 160 units but not 140
40units+100=140
J
John MoffatTutor·
Which question are you asking about?
J
jeremiah1324·
question 4 i guess
S
sma2tb·
I think the LIFO question should actually be asking for FIFO based on the answers?
J
John MoffatTutor·
It is a typing mistake - thank you for letting me know. I will have it corrected :-)
The first issue would be deducted from the opening bal leaving 60 units
The second issue of 70 would be taken 50 units from 26th August and 20 units from 14 August
That leaves remaining inventory of (60 @ $5) + (30 @ $5.5) = $465
The question is asking for the value of the issue on 29 August, and the pop-up answer is correct.
Also, the question does not ask for the value of the closing inventory. It asks for the value of the issue on 29 August, and the issue was of 70 units. 50 of them were from the most recent purchase and the other 20 were from the one before.
200+575=775
why 160 units but not 140
40units+100=140