Answer for Exam Four

Task 1.1
Total Manufacturing Cost = DM Used + DL Cost + FOH (Indirect Material + Indirect
Labor + Indirect Manufacturing Costs)
Total Manufacturing Cost = 142,000 + 80,000 + 48,000 (9,000 + 12,000 + 27,000)
=270,000

CGM = Beg WIP Inventory + Total Manufacturing Costs – Ending WIP Inventory
Cost of Goods Manufactured =31,000 + 270,000 - 29,000
= 272,000
CGS = Beginning FG Inventory + Cost of Goods Manufactured – Ending FG Inventory
CGS = 62,000 + 272,000 - 48,000
=313,000-48,000
=286,000

Task 1.2
BEP in unit = 240,000/40-30= 240,000/10 =24,000 units
BEP in dollars (sales) = 40*24,000= Birr 960,000

Task 1.3:
July August September October November December January
100,000 80,000 110,000 90,000 100,000 94,000 ______
_____ 40,000 55,000 45,000 50,000 47,000 ______
50,000 50,000 40,000 55,000 45,000 50,000 47,000
Total 50,000 90,000 95,000 100,000 95,000 97,000 47,000

Project Two:
July 01: Cash……………………. 40,000
Capital…………………………..40,000

July 02: No Entry

July 03: Prepaid Rent………………………3,200

Cash ……………………………..……3,200

July 05: Office Supplies………………..5,200

Accounts Payable…………………………5,200

July 09: Accounts Payable …………….2, 600

Cash……………………………………..2,600
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July 10: Cash ………………………….. 2,800
Service Revenue ……………………….. 2800

July 12: Office Equipment………………16,320

Cash ……………………………………… 16,320

July 15: Accounts Receivable…………... 9,600

Service Revenue ………………………….. 9,600

July19: Cash…………………………….. 1,400

Unearned service revenue …………………. 1400

July 22: Cash…………………………….. 5,000

Accounts Receivable ………………………… 5,000

July 26: Wage Expense ………………….. 4,800

Cash……………………………………….. 4800

July 30: Utility Expense…………………….. 680

Accounts Payable……………………………. 680

July 31: Bacha’s Drawing……………….. 2,800

Cash………………………………………. 2,800

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 Task 2: Transactions are posted to the ledger (Posting)
A/Payable
Cash
40,000 3,200
2,800 2,600
1,400 16,320
5,000 4,800
2,800
49,200 29,720
19,480

A/Receivable
9,600 5,000
4,600

Office Supplies
5,200

2,600 5,200
680

2,600 5,880
3,280

Unearned Service Revenue

1,400

Bacha’s Drawing
2,800

Bacha’s Capital
40,000

Service Revenue

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 2,800
9,600
12,400
Wages Expense
Prepaid Rent 4,800
3,200
Utilities Expense
Office Equipment 680
16,320

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Unadjusted Trial Balance
For the month of July 31, 2015

Account Title Dr Cr
Cash…………………………………19,480
A/receivable ………………….............4,600
Supplies………………………………5,200
Prepaid rent……………………..……3,200
Office equipment ……………………16,320
A/payable………………………………………………..……..3,280
Unearned service revenue………………………………………1,400
Drawing………………………….….2,800
Capital……………………………………………………………40,000
Service Revenue …….…………………………………………..12,400
Wage expense ……………….…….…4,800
Utility expense ………………………...680

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Total 57,080 57,080

Adjusting Entry
a. Rent Expense …………1,600
Prepaid Rent…………1600

b. Office supplies expense….1, 540

Office supplies ………………1,540

c. Depreciation Expense …………300

Accumulated Depreciation ……….300

d. Wage Expense ……………720

Wage payable……………….720

e. Unearned service revenue …….800

Service revenue ………………….800

f. A/Receivable …………………400
Service revenue ….………400

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Adjusted Trial Balance
For the month of July 31, 2015

Account Title Dr Cr
Cash…………………………………19,480
A/receivable ………………….............5,000
Office Supplies……………….………3,660
Prepaid Rent……………………..……1,600
Office Equipment ……………………16,320
Accumulated Depreciation ……………………………………300
Accounts Payable………………………………………..……..3,280
Wages Payable ……………………………………………….. 720
Unearned Service Revenue……………………………………600
Drawing………………………….….2,800
Capital…………………………………………………………40,000
Service Revenue ……………………………………….…….. 13,600
Wage Expense ……………….…….…5,520

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Rent Expense ………………………. 1,600
Supplies Expense ………….………. 1,540
Depreciation Expense ………………. 300
Utility expense ………………………...680
Total 58,500 58,500

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Income Statement
For the month of July 31, 2015
Revenues
Service revenue ……………………..…………..……………….13,600
Expenses
Wage Expense……………………………..5,520
Utility Expense……………………………..680
Rent expense……………………………….1,600
Supplies Expense ………………………….1,540
Depreciation Expense………………………300
Total Expense………………………………………………………. 9640
Net income……………………………………………………………3960

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Statement of Owner’s Equity
For the month of July 31, 2015
Beginning Capital…………………………………………………………….40,000
Net Income ………………………………………..3,960
Less: Drawing…………………………………..….2,800
Increases income…………………………………………….……………….. 1,160
Ending Capital …………………………………………………………………41,160

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Balance Sheet
For the month of July 31, 2015
Asset
Cash ……………………………………………..….19,480
Accounts Receivable ………………...................……5,000
Supplies …...................................................................3,660
Prepped Rent …………………………………….…...1,600
Office Equipment ……….…………....16,320
Less: Accumulated Depreciation………300 16,020

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Total Assets ………………………………………....45,760

Liabilities
Accounts Payable ……………………………3,280
Wages Payable ……………………………….720
Unearned Service Revenue …………….……1,400
Total Liabilities ………………………………….. 5,400
Owner’s Equity
Bacha’s Capital ……………………………………….40,000
Total Liabilities and Owner’s Equity …………….. 45,400

Project Three: Revenue Recognition

a. At a Point of Sale Method

Installment Sales ---------------------------------------------- 800,000
Cost of Merchandise Sold ------------------------------------ 480,000
Gross Profit ----------------------------------------------------- 320,000
b. Installment Method
= Gross Profit = 320,000 = 40%
Installment Sales 800,000

1st Year Collection = 300,000* 40% = 120,000

2nd Year Collection = 280,000* 40% = 112,000
3rd Year Collection = 220,000 * 40% = 88,000
Total = 800,000 320,000

Project Four

Date Unit Unit Cost Total Cost

July 1: Inventory ----------------- 300 10 = 3,000

July 15: Purchase ---------------- 350 11 = 3,850

July 20: Purchase ---------------- 450 12 = 5,400

July 28: Purchase ---------------- 500 13 = 6,500

Total 1,600 18,750

Periodic FIFO

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 Most Recent, July 28 -------------- 500 * 13 = 6,500
Next Most Recent, July 20 -------- 150 * 12 = 1,800
Total 630 8,300

Cost of Goods Sold = CMAFS – Cost of Ending Inventory

= 18,750 – 8,300 = 10,450

Net Sales = 950 * 20 = 19,000

Gross Profit = Net Sales – Cost of Goods Sold
= 19,000 – 10,450
= 8,550
Gross Profit -----------------------------------------------------------8,550
Less: General Expenses (3,500 – 1,000) ------------------------- 1,500
Income Before Tax -------------------------------------------------- 7,050
Less: Business Profit Tax (30%*7,050) -------------------------- 2,115
Net Income ------------------------------------------------------------ 4,935

Project Five: Payroll

SN Name of Basic Over allowa Gross Income Pc CA TD Net pay sig

employees salary time nce earning tax
1 Hawi 7800 __ 1000 8800 2137.5 546 - 2683.5 6116.5
2 Ware 4000 625 800 5425 975 280 - 1255 4170
3 Sorsa 2800 175 600 3575 508.75 196 - 704.75 2870.25
4 Gelane 1800 101.25 200 2101.25 262.75 126 50 435.75 1665.5
5 Momina 600 75 200 875 53.75 42 - 95.75 779.25
17,000 976.25 2800 20776.25 3937.75 1190 50 5174.75 15601.5

Prepared by ___________ Checked by ________ Approved By___________

Date…………… Date………………… Date…….……………
Sign____________ Sign _______________ Sign ………………

Journal Entries
1. To record the salary expense for the period
Salary expense……………………20,776.25
Income Tax Payable………………………………3937.75

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 Pension Payable…………………………….….…….1190
Credit Association Payable …………………………….50
Cash……………………………………………….…15601.5

2. To record the payroll tax payable (employer pension expense)

Payroll Tax Expense ………………………..1870
Pension Contribution payable………………..1870

3. To record the credit association payable

Credit Association Payable …………….50
Cash…………………………………50
4. To record the payment of payroll tax and withholding payments
Income tax payable ………………………..3,937.5
Pension payables……………………………3,060
Cash……………………………………………….6,997.50

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