2020 SACSS 3N POA EOY P2 Q2

2020 SACSS 3N POA EOY P2 Q2

2 Belina Health Care buys and sells thermal scanners. It records inventory movement using the FIFO method.  On 1 May 2020, it has 40 units of inventory worth $3600.

  Date

 

Number of items bought

Amount ($)

  2020

   

May 6

Goods were bought by cheque

80

6 400

       15

Goods were bought by cheque

40

3 000

       25

Goods were bought by cheque

40

5 000

  Date

   2020

 

Number of items sold

Amount ($)

May 17

Goods were sold by cash

120

12 070

         28

Goods were sold by cash

40

4 800

REQUIRED

a. What does FIFO stand for?

[1]

b. Prepare the inventory account for the month of May 2020. Bring the balance down to the next month.

[7]

c. Calculate the gross profit for the month ended 31 May 2020.

[3]

On 13 August a flash flood caused some goods costing $2000 to be destroyed.

d. Prepare the journal entry to record the loss of the inventory. Narration is required.

[3]

e. Name the accounting concept followed in part (d).

[1]

[TOTAL 15]

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FIFO stands for First In First Out.

Prudence concept 

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