- 15 Marks
FA – May 2012 – L1 – SB – Q3 – Accounting for Inventories in Accordance with IAS 2
Accounting treatment for containers used in sales and calculation of deposits owed by customers.
Question
Nimyaro Limited sold goods in containers, which are charged out to customers at N15 each. Customers were credited with N10 for each container returned before the expiration of the due dates. At the end of the year, inventories of containers in warehouse and all returnable containers in the hands of customers were valued at N5 each.
On 1 August 2011, the number of such containers were 10,000 and 35,000 respectively. During the year ended 31 July 2011, the following transactions relating to containers took place:
(i) 40,000 were purchased at N7.50 each.
(ii) 150,000 were charged to customers.
(iii) 125,000 were returned by customers.
(iv) 4,000 of the returned containers were useless and sold for N5,000.
(v) On 31 July 2011, 55,000 containers invoiced since 1 July 2011 were in the hands of customers.
You are required to record the above transactions in the books of Nimyaro Limited for
the year ended 31 July 2011 using Containers Suspense Account Method.
Find Related Questions by Tags, levels, etc.
- Tags: Containers, Debtor Control, Sales Accounting
- Level: Level 1
- Topic: Accounting for Inventories (IAS 2)
- Series: MAY 2012