Chapter 7

Exercise 1
The Balance sheet of ABC as at 31/03/201X follows (figures in million VND):

Account Account Name Amount Account Account Name Amount

Number Number
111 Cash on hand 300 152 Raw materials 100
112 Cash at bank 200 131 Accounts Receivables 70
331 Accounts Payables 130 211 Machinery and Equipment 350
153 Supplies 50 341 Borrowings and finance lease 200
liabilities
334 Salary Payables 50 138 Shortage of assets awaiting 10
for resolution
141 Advances 40 333 Tax Payables 20
214 Accumulated Depreciation (100) 353 Bonus fund 50
411 Owner’s equity X 154 Works in progress 20

During April, 201X, ABC completed the following transactions (figures in million VND):
1. Paid to supplier by cash at bank: 100
2. Used raw materials for manufacture of products: 80
3. Accrued salary expenses of employees for the month: Direct labors: 30; Factory staffs:
10; Office staffs: 20; Sales staffs: 20.
4. Employee & Employer contribution to the funds: Trade Union, Social Insurance and
Health Insurance, Unemployment Insurance, (applied to the current regulated rates)
5. Monthly depreciation expense of fixed assets in: production department: 10; company
office: 5; selling stores: 10.
6. Paid by cash on hand electricity and water invoices for the month of : production
department: 5; company office: 2; selling stores: 3, plus VAT 10%
7. Received the finished goods from production, 1.000 units. Works in progress at the
beginning of the month, 20. Works in progress at the month-end, 0
8. Sold 800 units of finished goods at the unit price of 0,3 (plus VAT 10%). Customer paid
50% of invoice amount by cash at bank.
Requirements:
1. Determine owner’s equity (X).
2. Journalize the preceding transactions on ABC’s book.
3. Calculate the unit cost of finished good.
4. Calculate net profit after tax. Apply the current corporation income tax rate of 0%.
5. Post the transactions to the T- accounts.
6. Prepare the trial balance of ABC as at 30, Apr, 201X.
7. Prepare the balance sheet of ABC for the month ended 30, Apr, 201X.

Exercise 2
Company ABC using average costing method and a perpetual inventory system shows financial
information in November year X as follows:
I. Opening balance of accounts (Currency Unit: VND)
- Account 152: 44.000.000 VND (1.000kg).
- Aount 154: 1.000.000 VND
II. Transactions occurred in month:
1. Purchased raw material of 1.000 kg at purchase price VND 44.000 per kg, VAT 10% and paid
by cash at bank. Transportation fee for purchased material was paid by cash on hand of VND
1.000.000 plus VAT 5%
2. Material used for direct production of finished goods 400kg, for plant in general of 300kg
3. Paid to supplier by cash at bank VND 20.000.000
4. Accrued salary of employees was totally 30.000.000 VND, with:
- direct labour cost: 20.000.000 VND
- Staff working at plant: 2.000.000 VND
- Sale staff: 3.000.000 VND
- Admin staff: 5.000.000 VND
5. Employees’ contribution and Employer's contribution to the funds: Trade Union, Social
Insurance, Unemployment Insurance and Health Insurance (applied to the current regulated
rates).
6. Purchased on credit a fixed asset of VND 50.000.000, VAT 10%. Transportation charge was
paid by cash on hand of VND 525.000 included VAT 5%
7. Monthly depreciation expense of fixed assets used at:
- Manufacturing Department: VND 1.800.000
- Sales department: VND 400.000
- Admin department: VND 800.000
8. Expenditure paid by cash incurred at :
- Manufacturing Plant: 100.000 VND
- Sales department: 200.000 VND
- Admin department: 300.000 VND
9. Received 1.000 units of finished goods from production process and works in progress at the
end of the month was VND 170.000.
10. Sold 800 units of finished goods at selling price of VND 150.000/unit plus 10% VAT,
customer promissed to make payment after 2 more weeks.
11. Determine the result of business operation, assume the rate of corporate income tax of 0%
Requirement: Calculate and journalize the above transactions including the unit cost of finished
goods and net profit or loss of the month.