#### Question 1: Inventories

Anna’s Frozen Treats Ltd sells only one product, a refreshing lemonade ice-block that is very popular during the summer. The company uses the perpetual inventory system for recording its cost of sales. The inventories and purchases for the month of December 2019 are as follows:

 December Purchases Sales Quantity Cost per unit Quantity 1 Beginning inventory 100 1.00 3 Purchase 200 1.30 7 Sales 220 9 Purchase 200 1.80 14 Sales 280 18 Purchase 300 2.00 21 Sales 200 30 Purchase 100 2.20

During the month units were sold for \$3.50 per unit.

Required: For the purpose of this question, please ignore GST. Show ALL your workings.

1. Calculate the cost of goods available for sale in December.
2. Calculate the cost of sales for 14 December using the FIFO method.
3. Calculate the cost of sales for 14 December using the LIFO method.
4. Calculate the cost of sales for 14 December using the weighted average cost method.
5. Using the weighted average cost method, calculate the \$ amount assigned to the inventory on hand at 31 December and the gross profit earned for the month of December.

Question 2: Statement of Cash Flows

Set out below are Williams Ltd’s financial statements for the year ended 30 June:

Williams Limited

Comparative Statement of Financial Position as at 30 June

 Assets 2020 2019 Cash \$ 95,000 \$  47,250 Accounts receivable (net) 86,800 57,000 Inventory 121,900 102,650 Investments (long-term) 84,600 87,000 Property, plant and equipment 250,000 205,000 Accumulated depreciation (49,500) (40,000) Total assets \$588,800 \$458,900

 Liabilities and Shareholders’ Equity Accounts payable                                                                   \$  52,700 48,280 Accrued operating expenses                                                      12,100 18,830 Notes payable (long-term)                                                       100,000 70,000 Share capital                                                                             250,000 200,000 Retained earnings                                                                     174,000 121,790 Total liabilities and shareholders’ equity                               \$588,800 \$458,900 Williams Limited Statement of Profit or Loss for the year ended 30 June 2020 Sales \$300,000 Gain on sale of equipment 8,750 Less: 308,750 Cost of sales                                                                  \$ 99,460 Operating expenses                                                          64,370 Income tax expense                                                           7,270 Interest expense                                                                 5,440 (176,540) Net profit after tax \$    132,210

The following additional information was provided:

1. All sales and purchases of inventories were on account.
2. Accounts payable pertains to inventory creditors.
3. Additional equipment was purchased for cash during the year.
4. Investments were sold for cash at cost.
5. Equipment costing \$47,000 was sold for cash with a gain of \$8,750.
6. A cash dividend was declared and paid during the year.
7. Operating expenses include depreciation expense of \$49,700.
8. Income tax expense and interest expense were settled in cash.
9. Additional shares were issued for cash during the year.

Required: For the purpose of this question, please ignore GST, but show all your workings.

1. Prepare a Statement of Cash Flows for Williams Ltd for the year ended 30 June 2020 using the direct method.
2. Prepare a reconciliation of net profit after tax to net cash provided from operating activities.

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