UniGeniusVCE Accounting

Independent preparation for VCE Accounting Units 3 and 4. Not affiliated with or endorsed by the Victorian Curriculum and Assessment Authority (VCAA).

Practice · Unit 3, Area of Study 1

Inventory

Under FIFO a sales return comes back at the cost of the last goods sent out, and a purchase return leaves at the cost on its credit note.

The lesson for this topic

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Question 1 · Short question · Inventory2 marks

Inventory

On 30 June 2026 Lorikeet Lighting counted its inventory and checked two lines against net realisable value.

Line A: 8 heaters with water damage, cost $150 each. After repairs costing $35 each they can be sold for $160 each (excluding GST), and a sales commission of $10 is paid on each one sold.

Line B: 5 display fans, cost $90 each, expected to sell for $120 each (excluding GST), with a sales commission of $12 each.

What is the total inventory write-down at 30 June 2026? (2 marks)

Extended-response questions

Dunes Surf Supplies: inventory card and doubtful debtsExtended response · Inventory · 20 marks
Dunes Surf Supplies is owned by Priya Nair and sells surf equipment. It uses a perpetual inventory system and the FIFO cost assignment method. Its inventory card for one bodyboard is shown up to 15 June 2026. All amounts on the card exclude GST, and the balance date is 30 June 2026.
Inventory card for a bodyboard (FIFO), June 2026
DateDetailsINOUTBALANCE
1 JuneBalance30 @ 50 = 1,500
4 JunePurchase40 @ 54 = 2,16030 @ 50 = 1,500; 40 @ 54 = 2,160
9 JuneSale30 @ 50 = 1,500; 15 @ 54 = 81025 @ 54 = 1,350
15 JunePurchase20 @ 57 = 1,14025 @ 54 = 1,350; 20 @ 57 = 1,140
Note 1: On 18 June 2026 a customer returned 5 of the bodyboards sold on 9 June. They had been sold for $90 each plus GST. Note 2: On 22 June 2026, 32 bodyboards were sold on credit for $90 each plus GST. Note 3: On 25 June 2026 Priya Nair took 2 bodyboards for her own use. Note 4: A physical count on 30 June 2026 found 15 bodyboards. Four of them have damaged fins: they can be sold for $40 each, net of all selling costs. Note 5: The Allowance for Doubtful Debts had a credit balance of $1,500 on 1 July 2025. On 10 February 2026 a customer's debt of $1,320 (including GST) was written off as bad against the allowance, with the GST adjusted through GST Clearing. Note 6: Net credit sales for the year ended 30 June 2026 were $160,000 (excluding GST). The business uses the Income Statement approach: doubtful debts are 1.5% of net credit sales. Accounts Receivable at 30 June 2026 was $28,600.
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