Mock Exam 4 — Question 1
Coastal Cycles | Complete on paper
✎ Work on paper. No notes. No phone. Set a 120-minute timer (VCAA allows 15 minutes reading time beforehand). Do not open model answers until every question is complete.
Coastal Cycles | Owner: Marcus Webb | Trading / bicycles and accessories | GST 10% | Perpetual FIFO, monthly reporting, customer terms n/30
Inventory Record – Mountain Bike Pro (April 2026)
| Date |
Transaction |
Units |
Unit Cost (excl. GST) |
Total Cost |
| 1 Apr |
Opening balance |
12 |
$420 |
$5,040 |
| 8 Apr |
Purchase |
20 |
$440 |
$8,800 |
| 15 Apr |
Sale |
18 |
FIFO |
? |
| 22 Apr |
Purchase |
15 |
$455 |
$6,825 |
| 28 Apr |
Sale |
14 |
FIFO |
? |
Additional information: Selling price $770 excl. GST per unit. Each sale is on credit (n/30). On 30 April, a physical count revealed 14 units on hand (Inventory account showed 15 units). Metro Cycles, a supplier, has offered a trade-in deal: return the old delivery van (original cost $28,000, accumulated depreciation $19,600 at 1 April) for $7,500 trade-in against a new van costing $44,000 excl. GST.
Question 1 (14 marks) — Inventory Records, Journal Entries and Asset Disposal
(a)5 marks
Using the FIFO method, calculate the Cost of Sales for the Sale on 15 April (18 units) and the Sale on 28 April (14 units). Show all workings.
Tip: 15 Apr sale (18 units): 12 units from opening @ $420 = $5,040 + 6 units from 8 Apr purchase @ $440 = $2,640. Total COGS = $7,680. 28 Apr sale (14 units): 14 units from remaining 8 Apr batch @ $440 = $6,160. Total COGS = $6,160.
(b)3 marks
Prepare the General Journal entry to record the Sale on 28 April (14 units on credit). Include both the revenue entry and the cost of sales entry. A narration is required for the revenue entry only.
Tip: Revenue: AR Dr $11,858 (14 × $770 × 1.1) / Sales Cr $10,780 (14 × $770) / GST Clearing Cr $1,078. Cost: Dr COS $6,160 / Cr Inventory $6,160.
(c)3 marks
Prepare the General Journal entry to record the inventory loss on 30 April.
Tip: Physical count 14 units; records show 15 units. Loss = 1 unit × $440 (last purchase price under FIFO, remaining batch). Dr Inventory Loss / Cr Inventory.
(d)3 marks
Prepare the General Journal entries required to record the trade-in of the old delivery van and purchase of the new van on 30 April. A narration is not required.
Tip: Step 1: Bring depreciation up to date if needed (check dates – assume already current). Step 2: Record disposal: Dr Accum Dep $19,600 + Dr Proceeds (Trade-in) account value + Dr Loss on Disposal (if applicable) / Cr Delivery Van $28,000. Step 3: Record new van: Dr Delivery Van $44,000 + Dr GST Clearing / Cr Bank / Cr Trade-in value.
