THE INSTITUTE OF FINANCE MANAGEMENT
FACULTY OF ACCOUNTING, BANKING & FINANCE
DEPARTMENT OF ACCOUNTING & FINANCE
INTRODUCTION TO FINANCIAL ACCOUNTING
TUTORIAL QUESTIONS-2023/2024
Question ONE
Define the term inventories as defined by the IAS 2 and explain what is meant by the term Net
Realizable Value
QUESTION TWO
Calculate the value of NRV and determine the value of closing Inventory to be reported into
financial statement from the following information. Item BX (Stock) was purchased for Tsh.
5,000,000/= in year 2001, this item can be sold at Tsh 7,000,000/= today, but in order to sale BX
at the mentioned price, one has to incur some costs such as repairing the item for sale Tsh.
1,000,000/=, paying agents to facilitate the sale Ts 500,000/=, documentation costs Tsh.
100,000/=. It is further expected that, after selling the BX Ts 2,000,000/= will be used to pay
school fees
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Required:
Compute ending inventory and cost of goods sold for statement prepared on 31st December,
under each of the following methods:
1. LIFO
2. FIFO
3. AVCO
QUESTION THREE
Below are the inventory details for Munir Flooring Ltd
Ceramic Wall Tiles # of Units Cost/Unit NRV/Unit
White 1,025 5,000 6,000
Black 875 4,500 4,250
Slate 645 7,000 7,110
Beige 325 2,000 2,250
Marble Flooring
Cordoba 10,000 9,250 935
Carrerra 12,000 10,500 10,500
Maricha 8,000 11,500 11,450
Shower Waterproofing
Novo 10,035 9,850 9,500
Deetra 986 6,750 7,150
Required
(i) Calculate the LCNRV for each group
(ii) Calculate the LCNRV for each individual product
(iii)Prepare the adjusting entries if any for parts (i) and (ii).
QUESTION FOUR
JIPU Company Ltd uses periodic inventory procedures and made the following sales and
purchases during the month of September:
Date Unit Unit cost
September 1 Balance 2,000 units @ 150
September 5 Sold 1,100 units
September 5 Purchased 4,000 units @ 155
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September 10 Sold 3,200 units
September 15 Purchased 4,000 units @ 160
September 20 Sold 2,400 units
September 25 Sold 2,300 units
September 30 Purchased 3,000 @ 165
Required
a) Calculate the value of closing inventory using FIFO, LIFO and WAM (use periodic
system).
b) Calculate the cost of goods sold for the methods above (FIFO,LIFO and WAM)
QUESTION FIVE
Kumekucha Company, which began operations on January 2, 2023 sales a single product called
product [Link] following data related to product X for the year.
Purchases during the year 2018 were as follow:
Date Units Unit Cost Total
TZS
January 2 250 2000 500,000
February 15 400 2000 800,000
April 8 500 2160 1080,000
June 6 200 2260 452,000
August 19 400 2300 920,000
October 5 300 2500 750,000
November 22 250 2800 700,000
TOTAL 2300 5,202,000
Periodic inventory procedure is used. On December 31st 20238 a physical inventory of
product X showed that 400 units were on hands.
REQUIRED:
(a) Calculate the cost of ending stock (Applying the following method of inventory FIFO, LIFO,
WAM).
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(b) What will be the gross profit of the company if the sale is TZS 10,000,000 and the NRV (Net
realizable Value) of the stock is TZS 700,000? (Calculate the gross profit using FIFO, LIFO, and
WAM).
QUESTION SIX
Mullac Limited sells four products J, K, L and M. At 31 August 2023 the following items are
held:
Cost Selling price
TZS TZS
J 4,759 5,200
K 2,172 2,300
L 3,223 3,300
M 6,747 7,100
5% sales commission is paid to the company's agents on all sales. What value for inventory
should be shown in the company's financial statements at 31 August 2023?
QUESTION SEVEN
At the end of a company’s first year on 31st March 2022, you are requested to complete the
closing stock figure from the following information.
DATE PURCHASES SALES
April 2022 800 units at shs.600
May 2022 700 units
July 2022 1200 units at shs.800
September 2022 600 units
December 2022 100 units at shs.800
February 2022 400 units
March 2022 700 units at shs.1,000
Required
i. Value the Inventory using
(a) FIFO method
(b) LIFO method
(c) Weighted Average Method/Average Cost Method
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ii. Comment on the results.
QUESTION EIGHT
During the month of January, February and March 2022, CHABBY Timber shop has made
purchases totaling TZS 9,600,000 and net sales amount to TZS 12,000,[Link] the gross profit
margin is 20% and the opening stock was TZS 1,000,[Link] the cost of ending inventory
using gross profit method
QUESTION NINE
Using the following information below
Details Cost Retail
st
1 February-opening inventories 800,000 1,500,000
February Purchases 700,000 1,000,000
February Sales 400,000
Required:
Calculate the cost of ending inventories by using Retail method.
QUESTION NINE
Kassim Tugende Ltd. is required to submit an interim financial statement to their creditors.
Below is information regarding their first six months for 2023
Additional information: Operating expenses Tshs. 1,500,000 Income tax rate 30%
Required:
(i) Prepare a schedule of calculations to estimate the company’s ending inventory at the end
of the quarter using the retail inventory method.
(ii) Prepare a multiple-step income statement for the first six months ending June 30, 2023.
QUESTION TEN
Fahma Supermarket in Mwanza has made purchases totaling of TZS 400,000,000 with a retail
price of TZS 500,000,000 and net sales amount to TZS 700,000,000 for the quarter ended 31 st
March [Link] the gross profit margin is 20% and the available stock before the said purchases
was TZS 450,000,000 with retail price of TZS 562,000,000.
Required:
a) Use the gross profit method to calculate
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i) Cost of ending inventories
ii) Cost of goods sold
b) Use Retail method to obtain
i) Cost of ending inventories
ii) Cost of goods sold
QUESTION ELEVEN
company XYZ IS a trading company dealing with different brands of a product. The product of
variety of pens in the market are being traded by the company. The following are the transactions that
took place in the company during August 2021.
Date of Purchase Units Purchased Units Sold Balance Cost Per Unit in Tshs
01/06/2021 1000 400 600 6,000
16/06/2021 500 200 300 4,000
21/06/2021 700 200 500 3,000
25/06/2021 900 300 600 2,500
Total 3100 1100 2000
As per the above table, a total of 1,100 units was sold by the company during August 2021. The sold
goods consist of different costs per unit i.e., Tshs. 6,000, Tshs. 4000, Tshs. 3,000 and Tshs.2,500
respectively.
Out of the total 1,100 units of inventory the sales were as follows:
(i). 400 units were sold from the 1000 units purchased on 01/06/2021 at 6,000.
(ii). 200 units were sold from the 500 units purchased on 16/06/2021 at 4,000.
(iii). The next 200 units were sold from the 700 units purchased on 21/06/2021 at 3,000.
(iv). And the last 300 units were sold from the 900 units purchased on 25/06/2021 at 2,500
Calculation of closing stock at the end of August 2021
QUESTION TWELVE
The following table shows the following financial data for ANAZITAKA Ltd. for the year ended
December 31, 2022
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Financial Data
For the year ended December 31, 2022
Description (Tshs) 2021 (Tshs) 2022
Cost of goods sold 500,000,000 660,000,000
Net income 250,000,000 350,000,000
Total assets 1,500,000,000 1,400,000,000
Equity 1,400,000,000 1,300,000,000
The following errors were made: The inventory count for 2021 was understated by Tshs.
30,000,000.
Required: Calculate the corrected cost of goods sold, net income, total assets, and equity for
2017 and 2022.