University of Oxford Principles of Accounting Questions follow the following format while preparing the assignment : Font Style: Times New Roman Font Size:

University of Oxford Principles of Accounting Questions follow the following format while preparing the assignment : Font Style: Times New Roman Font Size: 12 point for body and 14 point for Headings Line Spacing: 1.5 Margin: 2.54cm (One inch) on all the sides Page Number: At the bottom right hand corner of each page Colour: All words should be in black colour. Guidelines for Students to Submit the Assignment:
1) The students need to answer the assignment in the prescribed number of words as mentioned
in the assignment.
2) The students need to follow the following format while preparing the assignment :
Font Style: Times New Roman
Font Size: 12 point for body and 14 point for Headings
Line Spacing: 1.5
Margin: 2.54cm (One inch) on all the sides
Page Number: At the bottom right hand corner of each page
Colour: All words should be in black colour
3) Students who will fail to submit their assignment as per the deadline given are required to
make an online appeal along with the valid excuses as the guidelines which will be announced
through the college website or e-learning portal.
Page 1 of 5
Version 5
Question 1
(3 +2= 5 Marks)
Suhail Wholesale Company, Oman sells 90 pieces of Ceiling Fans @ RO. 80 per piece to Firoz
Retailers Company, Qatar. The shipping terms are FOB Shipping point with the payment terms
2/10 net30. The Sales Invoice No. is 2672 and the customer Order No. 605; dated March 12 2019.
On the 14th of march Firoz Retailers Qatar noticed that 6 pieces of Ceiling fans were not
functioning and as such were returned to Suhail Wholesale Company on the 16 th of March 2019.
Required:
a) Draft the invoice prepared by Firoz Retailers to record the purchases made on March 12,
2019.
b) Draft the document prepared by Firoz Retailers to record the returns made on the 16 th of
March 2020.
Question 2
( 3 +2 = 5 marks)
a) Opening Stock RO. 210000; Sales RO. 400000; Fuel expenses RO. 7000; Furniture Purchased
RO 50000, Returns Inwards RO. 3000; Gross Profit RO. 40000; Purchases RO. 100000;
Returns outwards RO. 5000. Calculate the Closing Stock and the Cost of Goods Sold.
b) Operating profit earned by Sugar Stores in 2016– 2017 was RO. 580,000 Its interest income
during the year RO 17300 and loss due to discontinued operations during the year was
RO18000. Calculate the amount of net profit earned by the firm.
Question 3
(5 +5 = 10 Marks)
a) XYZ Company has purchased goods for RO 20,000 from Rahima. The following are possible
errors that the accountant may commit:
i.
ii.
iii.
iv.
v.
The transaction was not recorded.
Were recorded as RO 25,000
The transaction was not posted to her account
Were posted to her account as R0 2,000
Were posted to Rashid s account
You are required to rectify all the above errors separately.
b) If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost
of goods sold? Justify and explain three merits of the method selected.
Page 2 of 5
Question 4
(10 marks)
You will have the responsibility to become an expert on one inventory methods (Weighted
Average Costing) under the perpetual method.
Using the following data, you must show and illustrates the relevant concepts and procedures
for your inventory method. You must write the illustration in a format that is clear and
understandable with all the steps and details.
Data:
The company uses a perpetual inventory system. It had the following beginning inventory and
current year purchases of its product.
Jan. 1
Jan. 14
Apr. 30
Sept. 26
Beginning inventory
Purchase
Purchase
Purchase
50 units @ RO. 10 = RO. 500
170 units @ RO. 12 = RO. 2,040
180 units @ RO. 15 = RO. 2,700
300 units @ RO. 20 = RO. 6,000
The company sales were on the following dates at a RO. 35 per unit sales price.
Jan. 10
Feb. 15
Oct. 5
30 units (specific cost: 30 @ RO. 10)
100 units (specific cost: 100 @ RO. 12)
350 units (specific cost: 100 @ RO. 15 and 250 @ RO. 20)
Concepts and Procedures to Illustrate in your answer/illustration:
i.
ii.
iii.
iv.
v.
Identify and compute the costs assign to the units sold. (Round per unit costs to three
decimals).
(4 Marks)
Identify and compute the costs assign to the units in ending inventory. (Round inventory
balances to the dollar).
(2 Marks)
How likely is it that this inventory costing method will reflect the actual physical flow of
goods? Explain.
(1.5 Marks)
What is the impact of this method comparing to others in determining net income and
income taxes?
(1 Mark)
How closely does the ending inventory amount reflect replacement cost (current market
cost)?
(1.5 Marks)
Page 3 of 5
Question 5
(10 marks)
XYZ Company sells electronic parts. Most transactions with customers are immediately paid with
cash or check. However, XYZ has five major customers that can purchase on credit. These
approved customers routinely buy on credit. The terms of the credit provide that payment must
occur within 30 days, and each customer has a maximum credit limit of RO. 10,000.
The following information is about each of the 5 credit customers’ transactions during month of
May:
Customers
Customer
A
B
C
D
E
Transactions information
At the beginning of the May, Customer A account has RO. 1,403.
On May 5, he purchases on account for RO. 7,237.
On May 17, paid RO. 1,403.
Beginning balance, RO. 5,275.
On May 15, Purchase on account for RO. 2,275.
On May 26, made a payment of RO. 4,275.
Beginning balance, RO. 0.
On May 9, Purchase on account for RO. 9,550.
Beginning balance, RO. 7,557.
On May 7, Purchase on account RO. 2,100.
On May 22, Purchase on account RO. 9,444.
On May 11, he made a payment of RO. 7,557.
Beginning balance, RO. 2,990.
On May 18, Paid RO. 2,990.
Instructions:
a) Prepare a subsidiary accounts receivable ledger account for each of XYZ’s customers.
(5 Marks)
b) Prepare the general ledger Accounts Receivable “control” account. Be sure the total in this
account reconciles to the sum of the individual balances in the subsidiary ledgers.
(2 Marks)
c) What is the purpose of a subsidiary ledger? What other control accounts might be
supported by subsidiary ledgers? (To answer this part, words must be at least 100 words).
(1.5 Marks)
d) Review XYZ’s subsidiary ledgers and identify which customer should be put on close watch
and monitor for being irresponsible, and which customer has exceeded their credit limit.
Justify. (To answer this part, words must be at least 100 words).
(1.5 Marks)
Page 4 of 5
Question 6
(10 marks)
The following are merchandising transactions of Wave Company, which applies the Periodic
inventory system.
July 3
Purchased merchandise from CAP Company for RO. 15,000 under credit terms of
1/10, n/30, FOB destination.
July 4
At CAP’s request, Wave paid RO. 250 cash for freight charges on the July 3
purchase, reducing the amount owed to CAP.
July 7
Sold merchandise to Morris Company for RO. 10,500 under credit terms of 2/10,
n/60, FOB destination. The merchandise had cost RO. 7,500.
July 10
Purchased merchandise from Dock Corporation for RO. 14,200 under credit terms
of 1/10, n/45, FOB shipping point. The invoice showed that at Wave’s request,
Dock paid the RO. 600 shipping charges and added that amount to the bill. (Hint:
Discounts are not applied to freight and shipping charges).
July 11
Paid RO. 300 cash for shipping charges related to the July 7 sale to Morris
Company.
July 12
Morris returned merchandise from the July 7 sale that had cost Wave RO. 1,250
and been sold for RO. 1,750. The merchandise was restored to inventory.
July 14
After negotiations with Dock Corporation concerning problems with the
merchandise purchased on July 10, Wave received a credit memorandum from
Dock granting a price reduction of RO. 2,000.
Instructions:
a) Prepare the journal entries to record all the above transactions.
(8 Marks)
b) Can a company change its inventory method each accounting period? Explain. (To answer
this part, the words must be at least 100 words).
(2 Marks)
Page 5 of 5

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