The four inventory valuation methods: Specific Identification: This method attaches the actual cost to an identifiable unit of product. Firms find this method easy to apply when p

management report

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Requirements:
Assignment (2)
Deadline: Saturday 27/10/2021 @ 23:59
For Instructors Use only
Instructions ? PLEASE READ THEM CAREFULLY
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism.
Submissions without this cover page will NOT be accepted.
Assignment Question(s): (Marks 5)
Q1. A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.(2 marks)
?
Explain the four inventory valuation methods.
Prepare general journal entries to record the March 16 sale using the
FIFO inventory valuation method.
LIFO inventory valuation method.
Q2. The office manager of ABC company has the authority to the whole financial operations. He authorizes activities, controls the companys expenses, records the companys transactions, and rarely takes vacation.
The owners of the company are happy with his work since the company is making a profit. You are giving the opportunity to educate the owners about the risk of not implementing internal control. What would be your advice? (2 marks)
Q3. At the end of the month, XYZ companys bank statement is different from the cash book balance. How would the company do the bank reconciliation? (1mark)
The Answers:
Q1:
The four inventory valuation methods:

Specific Identification: This method attaches the actual cost to an identifiable unit of product. Firms find this method easy to apply when purchasing and selling large inventory items such as cars. Under the specific identification method, the firm must identify each unit in inventory with a serial number or identification tag.
FIFO (first-in, first-out): This method assumes that the costs of the first goods purchased are those charged to cost of goods sold when the company actually sells goods. In this case, an assumed first-in, first-out flow corresponds with the actual physical flow of goods.
LIFO (last-in, first-out): This method assumes that the costs of the most recent purchases are the first costs charged to cost of goods sold when the company actually sells the goods.
Weighted-average: This method assumes costs flow at an average of the cost of goods available. In other words, we assign the average cost of the goods available for sale to cost of goods sold. The average cost is determined by dividing the cost of goods available for sale by the units on hand.
Preparing the journal entries:
FIFO:-
Sales = 40 units x 16 = 640 SAR
Cost of goods sold = 40 units x 10 = 400 SAR
Cash DR 640
Sales Revenue CR 640
Cost of Goods Sold DR 400
Inventory CR 400
LIFO:-
Sales = 40 units x 16 = 640 SAR
Cost of goods sold = 40 units x 12 = 480 SAR
Cash DR 640
Sales Revenue CR 640
Cost of Goods Sold DR 480
Inventory CR 480
Q2: Any company must have an internal control system because the internal control system provides a collection of policies and procedures that protect the company’s assets, ensure accuracy and prevent fraud in financial records, promote efficient operations, and urge adherence to company policies.
In order to maintain a solid, well-organized internal control system, the company must establish responsibilities, separate recordkeeping from custody of assets, divide responsibility for related transactions, apply technological controls, perform regular and independent reviews, insure assets and bond key employees and maintain adequate records.
However, the costs of an internal control system must not exceed its benefits.
Q3: A bank reconciliation statement is a summary of banking and business activity that reconciles a company’s bank account with its financial records. It is prepared periodically to explain the difference between cash reported on the bank statement and the cash balance on companys books. It is a useful financial internal control tool used to thwart fraud and minimize human errors.
There are two sides to a bank reconciliation. On the banks side, we will start with the balance on the bank statement and adjust it for outstanding checks, deposits in transit, and errors made by the bank.
On the books side, we will start with the Cash balance in the ledger and adjust it for customer checks that were drawn on accounts that were nonsufficient, bank service charges, interest earned, collections made by the bank on our behalf, and errors we made.
So the bank reconciliation will be as follows:
Assignment (2)
Deadline: Saturday 27/10/2021 @ 23:59
For Instructors Use only
Instructions ? PLEASE READ THEM CAREFULLY
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
All answers must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism.
Submissions without this cover page will NOT be accepted.
Assignment Question(s): (Marks 5)
Q1. A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.(2 marks)
?
Explain the four inventory valuation methods.
Prepare general journal entries to record the March 16 sale using the
FIFO inventory valuation method.
LIFO inventory valuation method.
Q2. The office manager of ABC company has the authority to the whole financial operations. He authorizes activities, controls the companys expenses, records the companys transactions, and rarely takes vacation.
The owners of the company are happy with his work since the company is making a profit. You are giving the opportunity to educate the owners about the risk of not implementing internal control. What would be your advice? (2 marks)
Q3. At the end of the month, XYZ companys bank statement is different from the cash book balance. How would the company do the bank reconciliation? (1mark)
The Answers:
Q1:
The four inventory valuation methods:

Specific Identification: This method attaches the actual cost to an identifiable unit of product. Firms find this method easy to apply when purchasing and selling large inventory items such as cars. Under the specific identification method, the firm must identify each unit in inventory with a serial number or identification tag.
FIFO (first-in, first-out): This method assumes that the costs of the first goods purchased are those charged to cost of goods sold when the company actually sells goods. In this case, an assumed first-in, first-out flow corresponds with the actual physical flow of goods.
LIFO (last-in, first-out): This method assumes that the costs of the most recent purchases are the first costs charged to cost of goods sold when the company actually sells the goods.
Weighted-average: This method assumes costs flow at an average of the cost of goods available. In other words, we assign the average cost of the goods available for sale to cost of goods sold. The average cost is determined by dividing the cost of goods available for sale by the units on hand.
Preparing the journal entries:
FIFO:-
Sales = 40 units x 16 = 640 SAR
Cost of goods sold = 40 units x 10 = 400 SAR
Cash DR 640
Sales Revenue CR 640
Cost of Goods Sold DR 400
Inventory CR 400
LIFO:-
Sales = 40 units x 16 = 640 SAR
Cost of goods sold = 40 units x 12 = 480 SAR
Cash DR 640
Sales Revenue CR 640
Cost of Goods Sold DR 480
Inventory CR 480
Q2: Any company must have an internal control system because the internal control system provides a collection of policies and procedures that protect the company’s assets, ensure accuracy and prevent fraud in financial records, promote efficient operations, and urge adherence to company policies.
In order to maintain a solid, well-organized internal control system, the company must establish responsibilities, separate recordkeeping from custody of assets, divide responsibility for related transactions, apply technological controls, perform regular and independent reviews, insure assets and bond key employees and maintain adequate records.
However, the costs of an internal control system must not exceed its benefits.
Q3: A bank reconciliation statement is a summary of banking and business activity that reconciles a company’s bank account with its financial records. It is prepared periodically to explain the difference between cash reported on the bank statement and the cash balance on companys books. It is a useful financial internal control tool used to thwart fraud and minimize human errors.
There are two sides to a bank reconciliation. On the banks side, we will start with the balance on the bank statement and adjust it for outstanding checks, deposits in transit, and errors made by the bank.
On the books side, we will start with the Cash balance in the ledger and adjust it for customer checks that were drawn on accounts that were nonsufficient, bank service charges, interest earned, collections made by the bank on our behalf, and errors we made.
So the bank reconciliation will be as follows:

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