Question 1

XYZ Pte Ltd had a beginning inventory of 300 units (unit cost $12) for a product for the month of March. Information relating to the purchases and sales for the month were as 

Required:

(a) Determine the cost of goods sold and cost of ending inventory for the month of March (where applicable, please round your answers to two decimal places) using the following inventory costing methods under the periodic system:

(i) First-in, first out (FIFO) method.

(ii) Last-in, first out (LIFO) method.

(iii) Weighted Average cost method.

(b) Identify and compare the effects on net profit and total assets across the three costing methods, holding all other conditions constant.

Question 2

Happy Enterprise Pte Ltd (“HEPL”) is a company incorporated in Singapore and uses the Singapore Financial Reporting Standards (“FRSs”). Its financial year end is 31 December. It is in the retail business. The unadjusted trial balance of HEPL as at 31 December 20X1 was as follows: 

Additional information:

(i) HEPL uses the periodic inventory system. Stock count done at the end of the year indicated that the ending inventory is $5,000.

(ii) On 1 September 20X1, the company paid $12,000 to rent a temporary space for a year to store some materials for a project.

(iii) The 6-month notes payable of $50,000 issued on 1 November 20X1 carries an annual interest rate of 6% to be paid on the maturity date.

(iv) The company made a sales of $23,000 to a customer during the month of December 20X1. The customer had been billed but would only pay HEPL in 20X2. This has not been accrued.

(v) For the utilities incurred in December 20X1, the account clerk had made the following entries: Debit Salaries expense $1,400 and Credit Salaries payable $1,400.

(vi) The unearned revenue of $5,000 was due to a cash payment by customer to HEPL in November 20X1 for goods to be delivered in December 20X1. HEPL delivered half of the goods in December 20X1.

(vii) The building of $2,400,000 was purchased on 1 January 20X0 and depreciated on a straight-line basis over fifty years. HEPL expects zero residual value at the end of its useful life.

Required:

(a) Analyse the information provided to demonstrate their treatment under the Singapore FRSs by preparing the adjusting entries needed.

(b) Prepare the Statement of Comprehensive Income for HEPL for the year ending 31 December 20X1, incorporating all the necessary adjustments.

(c) Prepare the Statement of Financial Position for HEPL as at 31 December 20X1, incorporating all the necessary adjustments.

(d) Compute and comment on the debt ratio of HEPL. The industry average is about 0.50.

Question 3

WNI Pte Ltd is a company incorporated in Singapore and uses the Singapore FRSs. Its financial year end is 31 December. It is in the retail business.

The comparative statement of financial position and extract of income statement for WNI Pte Ltd are given as follow:

WNI Pte Ltd

Comparative statement of financial position

31 December, 20X2 and 20X1

Additional information:

(i) There was no other purchase of non-current assets during the year.

(ii) The reduction in share capital balance is due to a buyback of shares. The shares were bought back using cash. No other share-related transaction occurred.

(iii) The company’s practice is to classify interest receipts/payments and dividend receipts under operating cashflows and dividend payments under financing cashflow on the Statement of Cash Flows.

(iv) When preparing the Statement of Cash Flows, the company’s practice is to present the section on cash flows from operating activities using the indirect method.

Required:

Prepare the statement of cash flows for WNI Pte Ltd for the year ended 31 December 20X2.