Question

29) Explain why temporary accounts are closed each period. (10 Points) 30) Discuss the difference between theperiodic and perpetual inventory systems. (10 Points) 31) A company made the following purchases during the year: Jan. 10 Mar. 15 Apr. 25 July 30 Oct. 10 15 25 10 20 15 units at $360 units at S390 units at $420 units at $450 units at $480 On December 31. there were 27 units in ending inventory. These 27 units consisted of 4 from the January 10 shipment, 6 from the March 15 shipment, 3 from the April 25 shipment, 12 from the July 30 shipment, and 2 from the October 10 shipment. Using specific identification, calculate the cost of the ending inventory.

Answer 1

ANSWER = 29
	Temporary account are includes revenue , expenses and withdrawal. These accounts are closed at the
	end of every period to prevent the balance of one period to another period.
ANSWER = 30	Periodic iventory: In this mehtod inventory value of any product is valued at the end of every period only.   This is simplest method
	of valuation compare to perpertual method.
	Perpetual Method: In this method of valuation, inventories are valued at after every transaction is incurred whether purchase or sales.
	This method is difficult and costly compare to perpetual method.
ANSWER = 31
SPECIFIC IDENTIFICATION METHOD
		PURHASES			COST OF GOODS SOLD			ENDING INVENTORY
Date	Particulars	Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
Jan, 10	Purchases	15	$                            360	$                          5,400	11	$                360	$             3,960	4	$            360	$             1,440
Mar, 15	Purchases	25	$                            390	$                          9,750	19	$                390	$             7,410	6	$            390	$             2,340
Apr, 25	Purchases	10	$                            420	$                          4,200	7	$                420	$             2,940	3	$            420	$             1,260
July, 30	Purchases	20	$                            450	$                          9,000	8	$                450	$             3,600	12	$            450	$             5,400
Oct, 10	Purchases	15	$                            480	$                          7,200	13	$                480	$             6,240	2	$            480	$                 960
		85		$35,550	58		$24,150	27		$11,400