Level 4 Code 1

Level IV Code 1
Project One
Tec. IT Company engaged with IT activities having five employees who have different
professions. Their names and other important information regarding their payroll data for the
month of April 2013 are presented as follows:
No Name BS OT GE IT PC TD NP Sign
1 TirusewBeamlak 2,067.5
0
2 NigatuTsehay 2,379.00
3 GeletawTemesgen 943.50
4 YemariamAbat 155.40
5 NitsuhAdamu
Total
Additional Information
 Tirusew and Nigatu have paid the same Income Tax for the month.
 Tiruswe’s pension contribution is 22.64% of her income tax.
 The total (employer’s and employee’s) pension contribution of Nitsuh is equal to that of
Yemariam’s pension contribution.
 Geletaw’s pension contribution is 28.74% of his income tax.
Required
A. Finalize the incomplete payroll register given above
B. If salary is paid in May next month, Journalize:
a. Salary and other benefits
b. Payment of payables
c. Payroll tax or company pension contributions
Project Two
The accounts listed below appear in the ledger of YedilKebir Company at June 30, the end of the
fiscal year. None of the year-end adjustments have been recorded.
Fees Receivable ………………..
Supplies ………………….…….675.00
Prepaid Insurance ……………….3, 725.00
Prepaid Advertising ……………..
Salaries Payable …………………
Unearned Rent ………………….
Income Summary ………………
Fees Earned …………….62, 250.00
Salary Expense …………41,700.00
Advertising Expense ………10,340.00
Insurance Expense ………...
Supplies Expense ………….
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Rent Income ……………… 9,100.00
a. Unbilled fees at June 30, Birr 7,750.00
b. Inventory of supplies at June 30, Birr 190.00
c. Birr 2,100.00 of insurance has expired during the year
d. Of a prepayment of Birr 1,000.00 for advertising space in Ethiopian Herald News Paper,
75% has been used and the remainder will be used in the following year.
e. Salaries accrued at June 30, Birr 1,140.00
f. Rent collected in advance that will not be earned until the following year, Birr 700.00
Required
1. Pass the necessary adjusting entries based on the above information
2. Prepare profit and loss statement, and Balance Sheet
Project Three
Pointer PLC has the following financial information for April 30, 2012:
Cash at bank account of the depositor’s record:
 Cash in bank account as of April 1, 2012 -----------------------------7,817.40
 Cash receipt journal as of during April 30, 2012 ---------------------7,829.50
Deposit tickets collected from bank
Date Amount
April 1, 2012 848.63 April 24, 2012 946.74
April 3, 2012 914.04 April 22, 2012 897.34
April 8, 2012 840.50 April 24, 2012 942.71
April 10, 2012 971.71 April 29, 2012 510.06
April 15, 2012 957.85
Check Register
Check Number Amount
740 287.50 753 1,217.33
741 555.15 754 249.75
742 501.90 755 172.75
743 671.30 757 1,021.90
744 506.88 758 359.60
746 415.91 759 601.50
748 490.90 760 486.39
750 1,016.90
Bank Statement for April

 Balance as of April 1, 2012 ………………..……………………..7,947.20
 Deposits and other credits ……………………………………… 10,652.77
 Checks and other debits ………………………………………… (8,232.21)
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Balance of April 30, 2012 ………………………………………. 10,367.76
Deposits of April
Date Amount
April 1, 2012 690.25 April 16, 2012 975.85
April 2, 2012 848.63 April 18, 2012 946.74
April 4, 2012 914.04 April 23, 2012 897.34
April 9, 2012 840.50 April 25, 2012 942.71
April 11, 2012 971.71
Check accompanying April Bank Statement

Check Number Amount
731 162.15 748 490.90
738 60.55 750 1,016.90
740 287.50 751 251.40
741 555.15 753 1,217.33
742 501.90 754 249.75
743 671.30 757 1,021.90
744 506.88 760 486.39
746 415.91
Bank Memo Accompanying April Bank Statement

Date Description
April 4, 2012 Bank Credit Memo for note collected
Principal ……………………………………………..2,500.00
Interest ……………………………………………….. 125.00
April 24, 2012 Bank Debit Memo for check returned because of insufficient funds …311.80
April 30, 2012 Bank Debit Memo for service charge ………..……………………….24.50
Pointer Plc.
Bank Reconciliation
March 31, 2012
Balance per bank statement ………………………………………………………….7, 947.20
Add: Outstanding Deposit …………………………………………………………… 690.25
Total …………………………………………………………………………………. 8,637.45
Deduct: Outstanding Checks
Check #731 ………………………………….162.50
Check #736 ………………………………….345.95
Check #738 ………………………………….251.40
Check #739 ………………………….……….60.55 820.05
Adjusted Balance …………………………………………………………………….. 7,817.40
Balance Per Depositors ………………………………………………………………… 7,832.50
Deduct: Service Charge …………………………………………………………………. 15.10
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Adjusted Balance …………………………………………………………………..…. 7,817.40
Required:
1. Prepare Bank Reconciliation Statement for the month of April, 2012.
2. Record the necessary journal entries.
Project Four
Kality Steel Factory Manufactures product A and B, the Budget department of the factory has the
following information’s at the beginning of the current year.
Product A Product B
Desired Inventory for each month in units …………… 20,000.00
Estimated beginning inventory for each month ………. 21,000.00 9,000.00
Selling Price per unit ………………………………….. 50.00 70.00
Estimated Sales in unit during the current quarter:
January February March Total

Area 1: A 6,500 6,900 6,600 20,000
B 1,950 1,500 1,500 4,950
For the production of A and B Quality Steel factory uses the following raw material:
Materials Unit Cost A B
Sand 0.50 20kg per unit 15kg per unit
Steel 1.00 10kg per unit 15kg per unit
Chemicals 5.00 10l t per unit 15lt per unit
Required
1. Prepare Sales Budget for the current Quarter
2. Prepare Production Budget for the current Quarter
3. Prepare Raw Material Purchase Budget for the current Quarter
Project Five
During the month of January the following transactions will occur to produce three products:
1. Raw material purchases on account
Sand ……………………………………………….500.00
Steel …………………………………………...…. 790.00
Chemicals ……………………………………….4, 500.00
2. Material issued and direct factory labor cost used

Material Direct Labor
Job#1 227.50 160.00
Job#2 780.00 210.00
Job#3 3,900.00 175.00
3. Factory overhead is 80% of direct labor cost
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4. Sold finished products for birr 7,800.00.
Required
1. Record the necessary journal entry for the above transactions
2. Calculate the cost of each job
3. Calculate total amount of gross profit
Project Six
MARU Merchandising is a VAT registered company has the following transactions for the
month of March 2013.
March, 15. Received cash from sales of furniture Birr 250,000.00
16. Paid Entertainment Expense Birr 5,000.00
19. Purchase raw materials for Birr 49,000.00 on cash
25. Paid Salary Expense for the period 60,000.00
26. Sales of furniture on account Birr 80,000.00
27. Paid utility Expense for the period birr 25,000.00
31. Supplies Expense during the month of March 20,000.00
31. Doubtful account expense for the period is Birr 8,000.00
Required
i. Record the above entries in a journal entry form
ii. Calculate the amount of VAT receivable/payable from/to ERCA
iii. Prepare income statement for the month of March 2013 for tax purpose and calculate
profit tax liability (profit tax 30%)
Project Seven
DXY Company purchase Commodity L for resale during the month of October 2013, during the
month of October the following transaction is occurred in relation to Commodity L.
October 1. Inventory ……………………………15 units @30.00
4. Sales …………………………….…. 5 units @35.00
10. Purchase …………………………… 10 units @32.00
17. Sales ………………………………. 12 units @39.00
22. Sales ………………………….…... 3 units @ 40.00
30. Purchase ………………….……… 10 units @ 33.00
Required:
1. DXY company uses Periodic Inventory System and FIFO costing method calculate:
A. Cost of Goods Sold
B. Cost of Inventory on hand at the end of October
C. Determine the amount of gross profit
2. DXY Company use Perpetual Inventory System and LIFO costing method calculate:
A. Cost of goods sold during October
B. Cost of inventory on hand at the end of October
C. Determine the amount of gross profit.
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Project One: Payroll
TEC IT Company
Payroll Register
April 30, 2013
S. Name Earnings Gross Deductions Total Net Pay Sign

N Basic Allo OT Earning Income Pension Deductio
Salary Tax Contr. Abay
1 Tiru 10,000 2,000 - 12,000 3,257.50 700 1,000 4,957.50 7,042.50
2 Nega 680 170 850 80.00 - - 80.00 770.00
3 Geleta 4,500 500 351.56 5,351.56 1,042.97 315.00 450 1,812.97 3,538.59
4 Yemar 2,600 200 365.63 3,165.63 506.41 182.00 260 948.41 2,217.22
5 Kuli 1,100 100 171.88 1,371.88 143.28 77.00 110 330.28 1,041.60
Total 18,880 2,800 1,059.07 22,739.07 5,030.16 1,274.00 1,820 8,129.16 14,609.91
Journal Entries
1. To record the payments of salary expense for the month:
Salary Expense ……………22,739.07
Income Tax Payable…………………..5,030.16
Pension Contribution Payable……….1,274.00
Abay Dam Payable…………………. 1,820
Cash………………………………….14,609.91
2. To record the Payroll Tax (Employer’s Pension) Expense:

Payroll Tax Expense………….2,002
Pension Contribution Payable…………..2,002
(18,200 x 11% = 2,002)
3. To record the Abay Dam Payment

Abay Dam Payable……………… 1,820
Cash ………………………………….. 1,820
4. To record the payment of payroll tax and withholding tax to the Inland Revenue
Authority:
Income Tax Payable…………….………5,030.16
Pension Contribution Payable…….……3,276.00
Cash…………………………………………. 8,306.16
Project Two: Accounting Cycle

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Adjusting Entries
a. Fees Receivable…………….7,750
Fees Revenue…………………..7,750
b. Supplies Expense……………485
Supplies………………………….…485
c. Insurance Expense…………2,100
Prepaid Insurance………………....2,100
d. Advertising Expense……….750
Prepaid Advertising………….……750
e. Salary Expense…………….1,140
Salary Payable……………..…1,140
f. Unearned Rent…………..700
Rent Income…………….……..700
YedilKebir Company
Adjusted Trial Balance
June 30, 2012
Account TitleDr.Cr
Cash…………………………………….. 9410
Fees Receivable…………………………56,060
Supplies………………………………….190
Prepaid Insurance………………………..1,625
Prepaid Advertising………………………250
Salary Payable…………………………………………………………….1, 140
Unearned Rent……………………………………………………………...300
Capital…………………………………………………………………… 42,810
Rent Income……………………………………………………………….9, 800
Fees Revenue……………………………………………………………… 70,000
Salary Expense………………………….42, 840
Advertising Expense……………………..11,090
Insurance Expense………………………..2,100
Supplies Expense………………………….485
124,050.00124,050.00
YedilKebir Company
Profit and Loss Statement
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For the month ended June 30, 2012
Revenues
Fees Revenue…………………………………………..70,000
Rent Income………………………………………….9, 800
Total Revenues…………………………………………………………….79, 800
Expenses
Salary Expense……………………………………...42,840
Advertising Expense………………………………..11,090
Insurance Expense………………………………….2, 100
Supplies Expense…....................................................4, 85
Total Expenses……………………………………………………..…….56, 515
Net Income……………………………………………………….……23,285.00
YedilKebir Company
Balance Sheet
June 30, 2012
Assets Liabilities
Cash………………………..9,410 Salary Payable……………..1,140
Fees Receivable…………...56,060 Unearned Rent……………....300
Supplies……………….……190 Total Liabilities……………..1,440
Prepaid Insurance…………1,625 Shareholders’ Equity
Prepaid Insurance…………250 Capital……………………..66,095
Total Assets………………..67,535 Total Liabilities & SHE……..67,535
Project Three: Bank Reconciliation

Pointer PLC
Bank Reconciliation
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April 30, 2012
Balance Per Bank Statement………………………………………………………10,367.76
Add: Deposit in transit……………………………………………………………..510.06
Subtotal……………………………………………………………………………..10,877.82
Deduct: Checks Outstanding……………………………………………………….1, 479.80
Adjusted Balance………………………………………………………………..….9, 398.02
Balance per Depositor’s Records……………………………………………..…… 7,108.32

Add: Notes Plus Interest………………………………………………………………2,625
Subtotal…………………………………………………...………………………… 9,733.32
Deduct: Bank Service Charge………………………………..24.50
NSF………………...…………………………….…311.80336.30
Adjusted Balance…………………………………………………………………….9, 397.02
Journal Entries
1. Cash in Bank……………………2,625
Notes receivables……………………..………2,500
Interest Income………………………………….125
2. Miscellaneous Expense……………..24.50
NSF…………………………………311.80
Cash in Bank…………………………..336.30
Project Four: Cost Accounting

1. Prepare Sales Budget for Current Quarter
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Sales Budget = Selling Price x Units Sold
Units Sold (A) = 20,000 units
Units Sold (B) = 4,950 units
S.N Types of Product Selling Sold Units Sold Total Revenues

1 Product A 50 20,000 100,000
2 Product B 70 4,950 346,500
Total 120 24,950 1,346,500
2. Prepare Production Budget
Production Budget = Budget Sales + Target Ending FGI – Beginning FGI
Budgeted units Sales (A+B)……………………………………37,550 (30,000 + 7,750)
Add: Ending Finished Goods Inventory (FGI)…………………30,000 (20,000 + 10,000)
Total Required Units………………………………….………. 67,550
Less: Beginning Finished Goods Inventory (FGI)…………....30,000 (21,000 + 9,000)
Units of Finished Goods to be Produced……………………….37, 550
3. Prepare Raw Material Purchase Budget
Purchase of DM = DM used in Prodn + End. Inventory of DM – Beg. Inventory of DM
Activity Materials Total

Sand Steel Chemical
Physical Units Budget to be used in

Production………………………….. 12,475 24,950 124,750
Add: Target Ending Inventory………. 30,000 30,000 30,000
Total Requirements…………………. 42,475 54,950 154,750
Less: Beginning Inventory…………. 30,000 30,000 30,000
12,475 24,950 124,750 162,175

Purchase to be made………………
Project Five
1. Record the necessary journal entry for the above transactions.
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I. Raw Material Purchases
Sand……………..….500
Steel…………..…….790
Chemicals…….…...4,500
Accounts Payable………………5,790
II. (A)Material issued (used) to work in process
Job#1 Work in Process………..227.50
Direct Material Inventory………..227.50
Job #2 Work in Process………780
Direct Material Inventory…….780
Job#3 Work in Process………3,900
Direct Material Inventory……3,900
(B) Accrued Payroll (for Labor Cost)

Job#1 Work in Process………..160
Accrued Payroll……………..160
Accrued Payroll …………….210
Job#3 Work in Process………175
Accrued Payroll ……………175
III. Factory Overhead Applied (80% of Direct Labor Cost)
Job#1 Work in Process………..128
Factory Overhead……………..128
Factory Overhead …………….168
Job#3 Work in Process………140
Factory Overhead ………..…140
IV. Cash…………………7,800
Sales……………..7,800
2. Calculate the cost of each job
Total cost of each job = Material cost + Direct Labor cost + Factory Overhead
Job#1 = 227.5 + 160 + 128 = 515.50
Job#2 = 780 + 210 + 168 = 1,158
Job#3 = 3,900 + 175 + 140 = 4,215
Total Cost of All Jobs = 515.50 + 1,158 + 4,215 = 5,888.50
3. Calculate the total amount of gross profit
GP = Net Sales – CGS
= 7,800 – 5,888.50
= 1,911.50
Project Six
1. Record the following transactions to the journal entries.
March 15: Cash…………………………287,500
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VAT Payable…………………………..37,500
Sales…………………………………...250,000
March 16: Entertainment Expense………………5,000
Cash……………………………………….5, 000
March 19: Purchase……………………49,000
VAT Receivable…………….7, 350
Cash………………………………..56,350
March 25: Salary Expense….……………60,000
Cash………………………………….60, 000
March 26: Accounts Receivable……………92,000
VAT Payable…………………………..12,000
Sales…………………………………...80,000
March 27: Utilities Expense………………25,000
Cash…………………………………….25, 000
March 31: Supplies Expense………………20,000
Cash………………………………….20, 000
March 31: Doubtful Accounts Expense…………8,000
AFDA………………………..………….8, 000
MARU Merchandising Company

Trial Balance
March 31, 2013
Account TitleDrCr
Cash ………………………………………….121, 150
Account Receivable……………………..……92,000
VAT Receivable……………………………….7, 350
AFDA…………………………………………………………………………………8,000
VAT Payable…………………………………………………………………………49,500
Sales….........................................................................................................................330,000
Purchase……………………………..……..49,000
Entertainment Expense…………………….5,000
Salary Expense……………………………..60,000
Utility Expense…………………………….25,000
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Supplies Expense…………………..………20,000
Doubtful Accounts Expense………………..8,000
Total………………………………….…….387, 500387,500
2. Calculate the VAT Receivable of VAT Payable

Output VAT (Sales) = 330,000 x 15% = 49,500
Input VAT (Purchase) = 49,000 x 15% = 7,350
VAT Payable = Out VAT – Input VAT

= 49,500 – 7,350
= 42,150
3. Prepare Income Statement for the tax purpose
MARU Merchandising Company

Income Statement
For the month ended March 31, 2013
Sales…………………………………………………………….330, 000
Less: CGS………………………………………………………49,000
Gross Profit……………………………………………………281,000
Expenses
Salary Expense……………………………..60,000
Utility Expense…………………………….25, 000
Supplies Expense…………………..………20,000
Total Expenses………………..……………………………….105, 000
Income before tax……………………………………………..176,000
Income Tax (30%)…………………………………………….52, 800
Net Income…………………………………………………….123, 200
Project Seven
1. Periodic LIFO
Oct 1 Inventory…………15@30………..450
Oct 10 Purchase………….10@32………..320
Oct 30 Purchase………….10@33………..330
351,100
Units Remained on Hand = UAFS – Units Sold

= 35 – 20 = 15 units
Earliest Costs, Oct 1…………..15@30…………450

15450
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Sales
5@35.........................175
12@39......................468
3@40.......................120
20763
Cost of Goods Sold

CGS = Beginning Inventory + Net Purchases – Ending Inventory
= 450 + 650 – 450 = 650
Gross Profit
= 763 – 650 = 113
2. Perpetual FIFO
Date Purchases CGS Inventory
Qty UC TC Qty UC TC Qty UC TC
Oct 1 15 30 450
4 5 30 150 10 30 300
10 10 32 320 10 30 300
10 32 320
17 10 30 300 8 32 256
2 32 64
22 3 32 96 5 32 160
30 10 33 330 5 32 160
10 33 330
Cost of Goods Sold

CGS = 150 + 300 + 64 + 96 = 610
Or
CGS = Beg Inventory + Net Purchases – Ending Inventory
= 450 + 650 – 490
= 610
Cost of Ending Inventory

= 160 + 330
= 490
Gross Profit
= 763 – 610 = 153
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Level Four Code 2
PROJECT ONE: PROCESS PAYROLL

s/n Employer’s name Basic Over time Allowance
salary Worked
1 RozaYohannes 7,500 1500 Position
1250 Transport
House
1000
2 Haile Selama 2,827 5hrs Public Holiday 30% of basic Hardship
(2.5) salary
3 YonasAbera 5,052 4hrs Evening (1.25)
40% of basic Hardship
2hrs Night (1.50) salary
4 NiguseYihdego 1,455 12hrs Weekend (2.00) -
1. All Employees are permanent except NiguseYihdego and all worked 40 hours per week.
2. During Ginbot 2007 all workers have done as they have been expected.
3. YonasAbera monthly pay birr 750.00 from his basic salary for credit association.
4. Assuming that pension contribution 7% from Employee&11% from Employer.
Required:
1. Prepared payroll Register sheet.
2. Prepared necessary journal entry for preparation of payroll and payment of deduction to
concerned party.
PROJECT TWO: SALE BUDGET

Expected monthly sales of HIWOT Mechanization are as follows;
1. October------------------------------------Birr 5,000,000
2. November---------------------------------Birr 4,000,000
3. December---------------------------------Birr 3, 500, 000
 Management expects futures sales collection past experience: 80% on cash sales, 20% on
credit sales and credit sales will be collected 80% on the current month, 10% collected on
the next month and the remaining balance collected on the following month.
Required:
1. Prepare sales budget.
2. Prepare sales Collection budget.
3. Determine the Receivable balance.
PROJECT THREE: MANUFACTURING COST
The following data pertain to the operation of Nobel Company, manufacturing of furniture of
Dec 31, 2001:
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Direct Material Used---------------------------------------------------------------Birr 243,000
Direct Labor Cost------------------------------------------------------------------------ 236,000
Total FOHs-------------------------------------------------------------------------------- 288,000
Beginning Inventory Work in Process------------------------------------------------- 118,000
Ending Inventory Work in Process----------------------------------------------------- 122,000
Beginning Inventory Finished Goods--------------------------------------------------- 20,000
Ending Inventory Finished Goods--------------------------------------------------------25,000
Sales----------------------------------------------------------------------------------------1,246,000
Selling Expense-----------------------------------------------------------------------------265,000
Administrative Expense-------------------------------------------------------------------- 87,000
Required:
1. Prepare Cost of Goods Manufactured
2. Prepare Income Statement
Project Four: Bank Reconciliation

Tsegay Trading has received his bank pass sheets for the year to 31, October 2015. As the date,
his balance at the bank amounted to birr 14,130 whereas his own cash book showed a balance of
birr 47,330. His accountant investigated the matter and discovered the following discrepancies:
a. Bank charges of birr 60 had not been entered in the cash book.
b. Checks drawn by Tsegay& totaling 450 had not yet been presented to the bank.
c. Tsegay had not entered receipts of birr 530 in his cash book from credit customer.
d. The bank had not credited Tsegay with receipts of birr 1,970 paid in to the bank on 31st
October, 2015.
e. Payments of creditors amounting to birr 1,240 had not been entered in the cash book.
f. Tsegay had entered a payment of wages expense birr 560 in his cash book as birr 650.
g. A check received for birr 300 from debtor had been returned by the bank marked “refer to
drawer”, but this had not been written back in the cash book.
h. Check totaling birr 6,585 draw on 29th October for payment of notes payable had been
debited instead of credited.
i. Deposits in transit October 31, totaled birr 880.
j. Some of Tsegay’s customers had paid to settle their debts by direct debit. Unfortunately,
the bank had credited some direct debits amounting to birr 16,650 to another customer’s
account.
Required:
1. Prepare bank reconciliation for Tsegay trading at November 30, 2015.
2. Prepare the general journal entries necessary to bring the cash in bank account into
agreement the adjustment.
Project Five: Inventory
Consider the following data for XYZ Company:
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Date Purchase Sold Units
Jan 1 Balance 200 units @birr 9
Jan 15 300 units @birr10
Jan 18 400 units @birr 11
Jan 19 No purchase 600 units
Jan 25 100 units @birr 12
Required:
1. Using periodic inventory system &FIFO method determine cost of goods sold & cost of
ending inventory.
2. Using perpetual inventory system & LIFO method determine cost of goods sold & cost of
ending inventory. .
Answer for Exam Two

Project One: Payroll
S Name of Basic Allowanc Over Gross EIT Pension CA Total Net Pay Sig
N Employee salary e Time Earning Contrib Deducti
1 Roza 7,500 1500 - 11,250 2,995 525 - 3,520 7,730
1250
1000
2 Haile 2,827 848.10 220.86 3,895.96 526.97 197.89 - 724.86 3,171.10
3 Yonas 5,052 2,020.8 252.60 7,325.40 1,194.11 353.64 750 2,297.75 5,027.66
4 Niguse 1,455 - 218.25 1,673.25 217.15 - - 217.15 1,456.10

16,834 6,618.90 691.71 24,144.61 4,933.23 1,076.53 750 6,759.76 17,384.85
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…………………… 24,144.61
Income Tax Payable……………………… 4,933.23
Pension Payable………………………….. 1,076.53
Credit Association Payable ……………… 750
Cash………………………………………. 17,384.85
2. To record the payroll tax payable (employer pension expense)

Payroll Tax Expense ……… 1,691.69
Pension Contribution payable………. 1,691.69
(15,379 * 11% = 1,691.69)
3. To record the credit association payable

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Credit Association Payable ………… 750
Cash………………………………………. 750
4. To record the payment of payroll tax and withholding payments
Income tax payable ………………… 4,933.23
Pension payables………………………2,768.22
Cash……………………………………… 7,701.45
Project Two
HIWOT Mechanization Company
Sales budget
For the month of Oct, Nov &Dec
OctNovDec
Sales on cash (80%) 4,000,000 3,200,000 2,800,000
Sales on credit (20%) 1,000,000 800,000 700,000
Total sales 5,000,0004,000,0003500,000
Cash (Collection) Budget

Oct Nov Dec
Current sale on cash 4,000,000 3200,000 2800,000
Collection on credit (80%) 800,000 100,000 100,000
Collection on credit (10%) - 640,000 80,000
Remaining (10%) - - 560,000
Total collection sales 4,800,000 3,940,000 3,540,000
Determine the Receivable Balance

= 80,000 + 140,000
= 220,000
Project Three
1. Prepare cost of goods manufacture
A. Total manufacturing cost = Direct material cost +Direct labor cost+ Total FOHS
TMC = 243,000 + 236,000 + 288,000
= 767,000
B. Cost of manufacture = BIWP + TMC –EIWP
= 118,000 + 767,000-122,000
= 1,007,000
C. CGS = BIFG + CGM –EIFG
= 20,000 + 833,000 – 25,000
= 828,000
2. Prepare Income Statement
Sale---------------------------------------------------------------------------1,246,000
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Less: CGS---------------------------------------------------------------------828,000
Gross Profit-------------------------------------------------------------------418,000
Less: Selling Expense------------------------------------265,000
Administer expense--------------------------------87,000
Total Expenses ---------------------------------------------------------------352,000
Income Before Tax------------------------------------------------------------66,000
Business Profit Tax (30%) --------------------------------------------------19,800
Net Income---------------------------------------------------------------------46,200
Tsegaye Trading
Bank Reconciliation
October 31, 2015
Balance per Bank Statement----------------------------------------------------------14,130
Add: Deposit not record by Bank----------------------------1,970
Deposit in Transit-----------------------------------------880
Bank Error -------------------------------------------------16,630
Subtotal------------------------------------------------------------------------------------33,630
Deduct: Check Outstanding------------------------------------------------------------- 450
Adjusted Balance-------------------------------------------------------------------------33,180
Balance per Depositor Record-----------------------------------------------------------47,330

Add: Collected by Bank------------------------------------------530
Depositor Error----------------------------------------------90
Subtotal--------------------------------------------------------------------------------------47,950
Deduct:
Payment to creditor----------------------------- 1240
Bank service-------------------------------------- 60
Refers return drawer----------------------------- 300
Depositor Error---------------------------------- 13,170 14,770
Adjusted Balance--------------------------------------------------------------------------33,180
Journal enters
1. Cash in bank--------------------------------------620
Collection from customer--------------------------------------------530
Account payable------------------------------------------------------90
2. Payment creditor------------------------------1240
Miscellaneous expense-------------------------60
Refers return drawer--------------------------300
A/payable---------------------------------------13,170
Cash in bank----------------------------------------------------------------------14,770
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Project Five: Inventory System
1. Periodic FIFO
Most Recent, July 28 -------------- 100 * 12 = 1,200
Next Most Recent, July 20 ---------300 * 11 = 3,300
Total 4004,500
Cost of Goods Sold = CMAFS – Cost of Ending Inventory
= 10,400 – 4,500 = 5,900
2. Perpetual LIFO
Purchases Sales (issues) Inventory
Date Units Unit Cost Total Cost Units Unit Cost Total Cost Units Unit Cost Total Cost
Jan. 1 200 Br. 9 Br. 1,800
15 300 Br. 10 Br. 3,000 200 9 1,800
300 10 3,000
18 400 11 4,400 200 9 1,800
300 10 3,000
400 11 4,400
19 400 11 4,400 200 9 1,800
200 10 2,000 100 10 1,000
25 100 12 1,200 200 9 1,800
100 10 1,000
100 12 1,200
Cost of Ending Inventory = 4,000
Cost of Goods Sold = 4,400 + 2,000 = 6,400
Level Four Code 3
Project One: Cost Accounting
The Chamber of Commerce has two exhibition centers:
A. Addis Ababa Exhibition Center
Fixed Costs = 2,000
Variable Costs = 80
B. Millennium Hall
Fixed Costs = 6,000
Variable Costs = 60
NB: Selling Price = 120 for both centers

Administration Cost = 3500
Band Budget = 2,500
Instruction:
1. Find the breakeven point at A and B
2. Find the profit when 150 and 300 customers attend respectively.
3. At what level the two operating income will be the same?
20 | P a g e
Project Two: Accounting Cycle
Huluka Company
Unadjusted Trial Balance
For the Year Ended July 31, 2010
Account Title DrCr

Cash ………………………………………………………..3,425
Accounts receivable………………………………………..7,000
Supplies……………………………………………………..1,270
Prepaid Insurance…………………………………………..620
Office Equipment………………………………………….51,650
Accumulated Depreciation……………………………………………………………9,700
Accounts Payable……………………………………………………………………925
Unearned Fees………………………………………………………………………1,250
Capital………………………………………………………………………………29,000
Drawing…………………………………………………5,200
Fees Earned…………………………………………………………………………59,125
Wages Expense…………………………………………22,415
Rent Expense ……………………………………………4,200
Utilities Expense………………………..………………2,715
Miscellaneous Expense………………….……………..1,505
Total 100,000 100,000
a) Supplies on Hand are Birr 380.
b) Insurance premium expired is Birr 315.
c) Depreciation on equipment is Birr 4,950.
d) Wages accrued but not paid during the period is 440.
e) Accrued fees earned but not recorded is Birr 1,000.
f) Unearned Fees during the period is Birr 750.
Instruction:
1. Journalize the adjusting entries.
2. Prepare Income Statement, Statement of Owner’s equity, and Balance Sheet.
3. Journalize the Closing Entries.
4. Prepare the Post Closing Trail Balance
Project Three: Payroll

The following information is given for XYZ Company:
S.N Name of Basic Representational Fuel OT Hrs. Duration of OT
Employee Salary Allowance Allowance worked OT works Rate
1 Tola 5,500 750 200 litters - - -
2 Chala 3,500 350 150 litters 6 hrs. Weekend 2
21 | P a g e
3 Bontu 850 - - 10 hrs. 10pm to 6am 1.5
4 Kena 2,800 150 100 litters 6 hrs. Holiday 2.5
5 Hordofa 1,500 - 50 litters 6 hrs. Holiday 2.5
 The management of the company expects all employees to work 40 hrs. per week
and all employees have worked as they have expected.
 Bontu is a Casual Employee
 Tola and Chala monthly contribute 10% of their basic salary to credit association
as monthly saving whereas Kena contribute 5% of his basic salary.
 Upto 1,000 birr fuel Allowance is exempted form tax and the selling price of one
litter is Birr 20.
 Pension is given as 6% from employee and 9% from employer.
Instruction:
1. Prepare a Payroll Register
2. Pass the necessary journal entries.

The following information is given:
 Balance per Bank Statement is 26,465.50
 Deposit in transit is 2,148.21
 Bank error which will be added is 270
 Checks Outstanding is 8,003.84
 Balance per depositors records is 17,324.40
 Notes plus interest of 150 is 3650.
 Depositors error which will be deducted is 75.78
 Bank service charge is 18.75
Instruction:
1. Prepare a Bank reconciliation
2. Pass the necessary journal entries.
Project Five: Revenue Recognition Method

Assume that in the first year operation, a dealer in house hold appliances had total installment
sales of birr 300,000 and the cost of the merchandise sold amounted Birr 180,000. Assume also
that collection of the installment accounts receivable were spread over three years as follows:
1st year Br 140,000
2nd year Br 100,000
3rd year Br 60,000
22 | P a g e
Instruction:
1. Find the gross profit at point of sale method
2. Find the gross profit under installment method
Project Six: Inventory System

The following information is given:
Jan 1: Beginning Inventory…………………………………………….. 200unit @9
Jan 10: Purchase ………………………………………………………... 300units@10
Jan 15: Purchase...……………………………………………………… 400units@11
Jan 29: Purchase………………………………………………………… 100units@12
The physical count on December 31 shows that 300 units of particular commodity are on hand.
Using periodic FIFO method:
1. Calculate the cost of goods sold
2. Calculating the gross profit, if selling price per unit is Birr 15.
3. Calculate the business profit tax; assume administration cost is 2,500 from this birr 900
birr is for personal investment. (Use 30% profit tax rate)
Answer for Exam Three

Project One
Given
Fixed Costs = 2,000
Variable Costs = 80
B. Milleneum Hall
Fixed Costs = 6,000
Variable Costs = 60
Selling Price is 120 for both, Administrative cost is 3,500 and Band budget is 2,500
Solution
A. Addis Ababa Exhibition Center B. Tommy Hotel Hall
Total Budget = 3,500 + 2,500 = 6,000 Total Budget = 6,000 + 6,000 = 12,000
FC = 4,000 + 12,000 = 16,000 FC = 12,000 + 12,000 = 24,000
VC = 80/unit VC = 60/unit
SP = 120/unit SP = 120/unit
SP – VC – FC = 0 SP – VC – FC = 0
120Q – 80Q – 8,000 = 0 120Q – 60Q – 12,000 = 0
40Q = 8,000 60Q = 12,000
Q = 8,000/40 = 200 tickets Q = 12,000/60 = 200 tickets
If 150 customer attended

SP*Q – VC*Q – FC
= (120*150) – (80*150) – 8,000
23 | P a g e
= 18,000 – 12,000 – 8,000 = (2,000)
B. Millennium Hall
SP*Q – VC*Q – FC
= (120*150) – (60*150) – 12,000
= 18,000 – 9,000 – 12,000 = (3,000)

A. Addis Ababa Exhibition Center B. Millennium Hall
SP*Q – VC*Q – FC SP*Q – VC*Q – FC
= (120*300) – (80*300) – 8,000 = (120*300) – (60*300) – 12,000
= 36,000 – 24,000 – 8,000 = 4,000 = 36,000 –18,000 – 12,000 = 6,000
Project Two
1. Adjusting Entries
a. Supplies Expense ------890
Supplies -----------------890
(1,270 – 380)
b. Insurance Expense -----315
Prepaid Insurance ---------315
c. Depreciation Expense ----4,950
Accumulated Depreciation ------4,950
d. Wages Expense -------440
Wages Payable -----------440
e. Accounts Receivable ------1,000
Fees earned ---------------1,000
f. Unearned Fees --------500
Fees Earned ---------------500
(1,250 – 750)
GELETA PLC
For the month of June 30, 2010
Account Title Debit Credit
Cash 3,425
Fees Receivable 8,000
Supplies 380
Prepaid Insurance 305
Office Equipment 51,650
Accumulated Deprecation 14,650
Account Payable 925
Wages Payable 440
Unearned fees 750
24 | P a g e
Geleta, Capital 29,000
Geleta, Drawing 5,200
Fees Earned 60,625
Wages Expense 22,855
Rent Expense 4,200
Utilities Expense 2,715
Depreciation Expense 4,950
Supplies Expense 890
Insurance Expense 315
Miscellanies Expense 1,505
Total 106,390 106,390
Huluka Company
Income Statement
For the Year Ended June 30, 2010
Revenues:
Fees Earned ---------------------------------------------------------------------------------- 60,625
Expenses:
Wages Expense --------------------------------------------- 22,855
Depreciation Expense --------------------------------------- 4,950
Rent Expense ------------------------------------------------- 4,200
Utilities Expense --------------------------------------------- 2,715
Supplies Expense ---------------------------------------------- 890
Insurance Expense --------------------------------------------- 315
Miscellaneous Expense --------------------------------------- 1,505
Total Expense ---------------------------------------------------------------------------------- 37,430
Net Income -------------------------------------------------------------------------------------- 23,195
Huluka Company
Statement of Owner’s Equity
Beginning Capital --------------------------------------------------------------- 29,000
Net Income -----------------------------------23,195
Less: Drawing ------------------------------- 5,200
Increase in Owner’s Equity --------------------------------------------------- 17,995
Ending Capital ------------------------------------------------------------------ 46,995
Huluka Company
Balance Sheet
Assets
Cash ------------------------------------ 3,425
25 | P a g e
Accounts Receivable ----------------- 8,000
Supplies -------------------------------- 380
Prepaid Insurance ------------------ 305
Equipment -----------51,650
Less: Acc. Depn -----14,65037,000
Total Assets ------------------------- 49,110
Liabilities
Accounts Payable ------------------- 925
Wages Payable ---------------------- 440
Unearned Fees ----------------------- 750
Total Liabilities -----------------------------2,115
Owner’s Equity
Capital -------------------------------------- 46,995
Total Liabilities ---------------------------- 49,110
Closing Entries
i. Fees Earned -------------------60,625
Income Summary ----------------60,625
ii. Income Summary ------------ 37,430

Wages Expense ---------------------- 22,855
Depreciation Expense --------------4,950
Rent Expense ------------------------ 4,200
Utilities Expense --------------------- 2,715
Supplies Expense --------------------- 890
Insurance Expense -------------------- 315
Miscellaneous Expense -------------- 1,505
iii. Income Summary ---------- 23,195

Capital ------------------------------ 23,195
iv. Capital --------------------- 5,200

Drawing ------------------------- 5,200
GELETA PLC
Post-Closing Trial Balance

Cash 3,425
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Supplies 380
Account Payable 925
Wages Payable 440
Unearned fees 750
Total 63,760 63,760
Project Three: Payroll

S. Name BS Allowance OT GE EIT PC CA TD NP Si
N Rep Fuel g
1 Dawit K. 5,500 750 4,000 - 10,250 2,312.5 330 550 3,192.5 7,057.5
2 Abebe A. 3,500 350 3,000 262.5 7,112.5 1,354.38 210 350 1,914.38 5,198.12
3 Chalyu T. 850 - - 79.69 929.69 91.95 - - 91.95 837.74
4 Meseret L. 2,800 150 2,000 262.5 5,212.5 806.25 168 280 1,254.25 3,958.25
5 Selam B. 1,500 - 1,000 140.63 2,640.63 210.63 90 75 375.63 2,265
Total 14,150 1,250 10,000 745.32 26,145.32 4,775.71 798 1,255 6,828.71 19,316.61
Journal Entries
Pension Payable………………………….. 1,076.53
Credit Association Payable ……………… 750
Cash………………………………………. 17,323.28

(15,379 * 11% = 1,691.69)
27 | P a g e
Credit Association Payable ………… 750
Cash………………………………………. 750

Cash……………………………………… 7,668.30

XYZ Company
Bank Reconciliation
December 31, 2016
Balance Per Bank Statement ------------------------------------ 26,465.50
Add: Deposit in Transit ----------------------------- 2,148.21
Bank Error -------------------------------------- 2702,418.21
Subtotal ----------------------------------------------------------------- 28,883.71
Deduct: Checks Outstanding ---------------------------------------- 8,003.84
Adjusted Balance ------------------------------------------------------ 20,879.87
Bank Balance per Depositor Records ------------------------------ 17,324.40
Add: Notes plus Interest -------------------------------------------- 3,650
Subtotal ------------------------------------------------------------- 20,974.40
Deduct: Depositor Error ------------------------ 75.78
Bank Service Error -------------------- 18.7594.53
Adjusted Balance ----------------------------------------------------- 20,879.87
Project Five
a. At a Point of Sale Method
Installment Sales ---------------------------------------------- 300,000
Cost of Merchandise Sold ------------------------------------ 180,000
Gross Profit ----------------------------------------------------- 120,000
b. Installment Method
= Gross Profit = 120,000 = 40%
Installment Sales 300,000
1 Year Collection = 140,000* 40% = 56,000
st
2nd Year Collection = 100,000* 40% = 40,000

3rd Year Collection = 60,000 * 40% = 24,000
Total = 300,000 120,000
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Project Six: Inventory System
DateUnitUnit CostTotal Cost
July 1: Inventory ----------------- 200 9 = 1,800
July 15: Purchase ---------------- 300 10 = 3,000
July 20: Purchase ---------------- 400 11 = 4,400
July 28: Purchase ---------------- 100 12 = 1,200
Total 1,000 10,400
Periodic FIFO
Most Recent, July 28 -------------- 100 * 12 = 1,200
Next Most Recent, July 20 --------- 200 * 11 = 2,200
Total 6303,400

= 10,400 – 3,400 = 7,000
Gross Profit = Net Sales – Cost of Goods Sold

= 700 * 15 = 10,500
Gross Profit = 10,500 – 7,000
= 3,000
Gross Profit ------------------------------------------------------------3,000
Less: General Expenses ( 2,500 – 900) --------------------------- 1,400
Income Before Tax -------------------------------------------------- 1,600
Less: Business Profit Tax (30%*1,600) -------------------------- 480
Net Income ------------------------------------------------------------ 1,120
Level Four Code 4
Project One: Perform Cost Accounting and Planning

The following data is related to Tulu wood work shop for the month of March, 2014.
Beginning Direct Material Inventory ----------------100,000
Ending Direct Material Inventory---------------------17,000
Beginning WIP inventory-------------------------------31,000
Ending WIP inventory ----------------------------------29,000
Beginning FG Inventory -------------------------------62,000
Ending FG Inventory-------------------------------------48,000
Direct Labor ------------------------------------------------80,000
Direct Material Used -------------------------------------142,000
Indirect Material Used ------------------------------------9,000
Indirect Labor ----------------------------------------------12,000
Other Manufacturing Overhead -------------------------27,000
29 | P a g e
Task 1.1: Calculate costs of goods manufactured and calculate cost of goods sold for the
given period.
Assume XYZ Company manufactured and sells adding machine. The company’s income
statement for the most recent year is given below:
Total Cost Per Unit
Sales(40,000 units ) 1,600,000 40
Variables expense 1,200,000 30
Contribution margin 400,000 10
Fixed expense 240,000
Net income 160,000
Task 1.2: Based on the above data perform the following tasks compute the company’s
breakeven point both in unit and sales birr.
Task 1.3: Compute cash disbursement in August.
Langano trading has the following purchases budget for the last half of, 2015:
July-----------------------Br 100,000 October----------------------Br 90,000
August-------------------Br 80,000 November-------------------Br 100,000
September---------------Br 110,000 December-------------------Br 94,000
Task 1.4: If the company pays one half at the time of purchase and the remainder in the month
following purchase, calculate the expected cash disbursement for purchase in August.
Project Two: Process Business Documents and Financial Report

July 01: Bacha invested Br 40,000 in cash to form Bacha Website Design.
July 02: Order office supplies Br 5,200.
July 03: Rent an office pays two months’ rent in advance, Br 3,200.
July 05: Received office supplies ordered on July 2 and an invoice for Br 5,200.
July 09: Made a partial payment of the amount owed for the office supplies received on July 5,
Br 2,600.
July 10: Performed a service for an automobile dealer by designing a website and collects a fee
in cash Br 2,800.
July 12: Purchased Office Equipment Br 16,320 for cash.
July 15: Performed a service for a department store by designing a website bills for the fee new
but will collect the fee later, Br 9,600.
July 19: Accepted an advance fee a deposited on website to be designed, Br 1,400.
July 22: Received cash from customer previously billed on July 15, Br 5,000
July 26: Paid Employees four weeks wages, Br 4,800.
July 30: Received but doesn’t pay the utility bill that is due next month, Br 680.
July 31: Bacha withdraw, 2,800 in cash.
30 | P a g e
Instruction: record the journal entry, post to ledger and prepare unadjusted trial Balance.
Additional Information for adjustment
a. Expiration of one month’s rent Br 1,600.
b. Consumption of office supplies Br 1,540.
c. Depreciation of office equipment Br 300.
d. Accrued of unrecorded wages Br 720.
e. Performance of service for which cash was received in advance, Br 800.
f. Accrued of unrecorded revenues, Br 400.
Instruction: Record the:

1. Adjusting entry
2. Prepare income statement.
3. Prepare owner equity statement.
4. Prepare Balance sheet (ignore business profit tax).
Project Three: Revenue Recognition
The first year of operations Hope Company dealer of house hold appliances had a total
installment sales of Br 800,000 with a related cost of Br 480,000 of merchandise sold. The
collection of the installment account receivable as spread over three years as follows.
1st year Br 300,000
2nd year Br 280,000
3rd year Br 220,000
Instruction: Show your computation clearly for the following tasks.
Task 1: Compute the gross profit recognized at the point of sale.
Task 2: Compute the gross profit recognized for each year based on installment method.
Project Four:Inventory System

Abdi Boru PLC had the beginning inventory and purchases during the month of December 30,
2015 are given, the company uses the periodic inventory system.
UnitUnit Cost
Dec 1. Inventory 300 Br 10
10. Purchase 350 Br 11
31 | P a g e
At the end of the months the physical count of the remaining inventory items shows that 650 unit
are on hand. The company’s uses periodic FIFO cost assumption.
Task 4.1: Compute the cost of merchandise sold and cost of ending inventory on December 31,
2015.
Task 4.2: Compute the gross profit of Abdi Boru Company for the month of December 2015.
Assuming sales price is Br 20 for the merchandise sold.
Task 4.3: Compute the business profit tax if the company has incurred Br 3,500 general expense
including 1,000 entertainment expenses during the fiscal year.
Project Five: Process Payroll

CYZ Agency a government enterprise pays the salary of the employees as per the Ethiopian
calendar months. The agency has an eight working hours per day and five working days per
week.
S/ Name of Employees Basic Salary Monthly OT Hours Duration of
N Allowance worked OT work
1 Hawi 7,800 1,000 - -
2 Ware 4,000 800 10 Public holy
day
3 Sorsa 2,800 600 8 Up to 10pm
4 Gelane 1,800 200 6 10pm to 5 am
5 Momina 600 200 10 Weekend
 All employees are permanent.
 Gelane agreed to contribute monthly birr 50 from her salary to credit association.
 The workers are expected to work 40 hours per week & 160 hours month.
 Allowance in excess birr 800 are taxable.
Instruction:
Task 1.1 Prepare payroll register sheet for the month of Tir, 2008.
Task 1.2 Records the payment of salary as Tir 30, 2008.
Task 1.3 Record payroll tax expenses as Tir 30, 2008.
32 | P a g e
Task 1.4 Record the payment of payroll withholding to concerned bodies, assuming the payment
was made on Yekatit 15, 2008.
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 ______
50,00050,00040,000 55,00045,00050,00047,000Total50,00090,00095,000
100,00095,00097,00047,000
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
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July 09: Accounts Payable …………….2, 600
Cash……………………………………..2,600
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’sDrawing
2,800
Bacha’s Capital
40,000
Service Revenue
35 | P a g e
2,800
9,600
12,400
Wages Expense
Prepaid Rent 4,800
3,200
Utilities Expense
Office Equipment 680
16,320
Bacha Website Design

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 57,08057,080
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

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
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Wage Expense ……………….…….…5,520
Rent Expense ………………………. 1,600
Supplies Expense ………….………. 1,540
Depreciation Expense ………………. 300
Utility expense ………………………...680
Total 58,50058,500

Income Statement
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

Beginning Capital…………………………………………………………….40,000
Net Income ………………………………………..3,960
Less: Drawing…………………………………..….2,800
Increases income…………………………………………….……………….. 1,160
Ending Capital …………………………………………………………………41,160

Balance Sheet
Asset
Cash ……………………………………………..….19,480
Accounts Receivable ………………...................……5,000
Supplies …...................................................................3,660
Prepped Rent …………………………………….…...1,600
Office Equipment ……….…………....16,320
38 | P a g e
Less: Accumulated Depreciation………30016,020
Total Assets ………………………………………....45,760
Liabilities
Accounts Payable ……………………………3,280
Wages Payable ……………………………….720
Unearned Service Revenue …………….……1,400
Total Liabilities ………………………………….. 5,400
Owner’s Equity
Bache’s Capital ……………………………………….40,000
Total Liabilities and Owner’s Equity …………….. 45,400
Project Three: Revenue Recognition

c. At a Point of Sale Method
Gross Profit ----------------------------------------------------- 320,000
d. Installment Method
= Gross Profit = 320,000 = 40%
1st Year Collection = 300,000* 40% = 120,000

Total = 800,000 320,000
Project Four
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
Most Recent, July 28 -------------- 500 * 13 = 6,500
Next Most Recent, July 20 -------- 150 * 12 = 1,800
Total 6308,300

= 18,750 – 8,300 = 10,450
39 | P a g e
Net Sales = 950 * 20 = 19,000
= 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 time allowance Gross Income tax Pc CA TD Net pay sig
employees salary earning
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
Salary expense……………………20,776.25
Income Tax Payable………………………………3937.75
Pension Payable…………………………….….…….1190
Credit Association Payable …………………………….50
Cash……………………………………………….…15601.5

Payroll Tax Expense ………………………..1870
Pension Contribution payable………………..1870
40 | P a g e
Credit Association Payable …………….50
Cash…………………………………50
Income tax payable ………………………..3,937.5
Pension payables……………………………3,060
Cash……………………………………………….6,997.50
Level Four Code 5
Project One Perform Cost Accounting & Planning
Assumption:
Bishoftu Chamber of Commerce is planning to organize Easter Trade Exhibitions. There are two
possible venues /locations.
A. Bishoftu Ababa Exhibition center which has a fixed rental cost of Br. 4,000 plus a charge
of Br. 160/person for its own catering of meals, serving of drinks & entertainments.
B. Tommy Hotel Hall which has a fixed rental cost of Br. 12,000. The chamber of
commerce can hire a caterer for meals & waiters and waitresses to serve drinks & meals
at Br. 90/person.
The chamber of commerce budgets br. 7,000 cost for Administration & marketing. The band will
cost a fixed amount of Br. 5,000. Tickets to this prestigious event will be Br. 240/ person. All
the drinks served and the prizes given away at the event will be donated / sponsored.
Required:
1. Compute the Breakeven point for each location in terms of number of ticket sold.
2. Compute the operating incomes on the event if 300 persons are attend the Trade
Exhibition. Compare and comment on the results for AA Exhibitions & Tommy Hotel
Hall.
41 | P a g e
Project Two: Prepare Business Documents & Financial Report
Three years agoGadisa, Bona &Mesfinetablished GELETAPrivate Limited Company . At June
30, 2010 the end of the current fiscal year the GELETA Trial balance shows the following
balances:
GELETA PLC
Trial Balance
On June 30, 2010

Cash 3,425
Supplies 1,270
Account Payable 925
Unearned fees 1,250
Fees Earned 59,125
Rent Expense 4,200
Total 100,000 100,000
42 | P a g e
The following data are given as additional information for adjustments required on June 30,
2010:
A. Supplies on hand on June 30, 2010 are Br 380.
B. Insurance Premium expired during the year are Br 315.
C. Depreciation of Equipment during the year is Br 4,950.
D. Wages accrued but not paid at June 30, 2010 is Br 440.
E. Accrued fees earned but not recorded at June 30, 2010 are Br 1,000.
F. Unearned fees on June 30, 2010 are Br 750.
Required:
1. Journalize the adjustment
2. Prepare Income Statement, Owners Equity Statement and Balance Sheet.
3. Journalize Closing Entries.
4. Prepare the Post-Closing Trial Balance.
Project Three: Plan and Manage Customer Accounts

In the first year operation Glorious Company a dealer of house hold appliances had a total
installment sales of birr 600,000 with a related cost of birr 360,000 of merchandise sold. The
collections of the installment account receivable are spread over three years as follows:
1st Year birr 280,000
2nd Year birr 200,000
3rd year birr 120,000
Required: Show your computations clearly:
A. What is the gross profit recognized based on point of sales method.

B. What will the gross profit to be recognized for each year installment based
installment method.
C. Determine receivables balance.
Project Four: Design and develop accounting systems & Inventory Management
Brothers Trading PLC uses a periodic inventory system. It’s beginning inventory & purchases
during the month of July 2014 were as follow:
UnitUnit Cost
July 01. Inventory --------------- 300------------------------------------Br 8
July 15. Purchases--------------- 350------------------------------------- 11
July 20. Purchases -------------- 450 ------------------------------------ 12
July 28. Purchase --------------- 550 ------------------------------------- 13
43 | P a g e
At the end of month the physical count of the remaining inventory items show that 630 units are
on hand. The company uses period FIFO Inventory Method.
Required (Tasks):
Task 1: What will be the cost of merchandise sold and cost of ending inventory on July 2014?
Task 2: Assuming sales prices of Br 20 of the merchandise inventory, calculate the gross profit
of Brothers Company for the month of July 2014.
Task 3: The Company has incurred Br 2,500 general expenses including Br 900 Entertainment
expenses during the fiscal year. Calculate the business profit tax using 30% tax rate.
Project Five: Perform Payroll Accounting and Tax Calculation

KIYA International Co. is private limited company incorporated under the Ethiopian law. The
following information was taken from the payroll register of Sene 30, 2006 E.C
S/N Name of Basic Allowance Overtime Duration of
employee Salary Representation Fuel in liter worked Overtime
1 DawitKebede Br 5,500 Br 750 200 litter - -
2 AbebeAyele 3500 350 150Litter 6hrs Weekend
3 Chalyu Tufa 850 - - 10hrs 10pm-6am
4 MeseretLema 2,800 150 100Litter 6hrs Public Holiday
5 SelamawitBelete 1500 - 50 Litter 6hrs Public Holiday
The corporation employees work 8 hrs in a day and during the month there are 160 working
hours. Chalyu Tufa is contract employee Dawit, Abebe and Meseret contribute 10% of their
monthly basic salary for saving and credit associations while Selamawit 5%. It is presumed that
an employee who has got fuel allowance up to Br 1,000 enjoys tax exemption and the current
price of fuel is Br 20/litter payment is also affected on the pay day.
a. Ethiopian income tax proclamation No. 286/2002

Employment Income (per month) Income Tax Payable (%)
0 -150 Exempt Threshold
151 -650 10%
651 – 1,400 15%
1,401 - 2350 20%
2,351- 3,350 25%
3,350 – 5,000 30%
Above 5,000 35%
b. Overtime Rate
44 | P a g e
Overtime Duration Rate
6 pm – 10 pm 1.25
10 pm – 6 am 1.50
Weekend 2.00
Public Holiday 2.50
c. Pension Contribution
From employee --------------6%
From Employer --------------8%
Required:
Unless the payment is tax exempt, the employer is responsible for calculating and withholding
the tax from every payment to an employee and to forward it to Ethiopian Revenues and
Customs Authority (ERCA) within 30 days of the ends of each calendar month. Assume yourself
as an accountant of the aforementioned company:
1. Prepare Payroll Sheet for the month of Sene 2006.
2. Record the transaction on the pay day.
3. Record payment of withholding.
Answer for Exam Five

Project One
Given
C. Bishoftu Ababa Exhibition Center
Fixed Costs = 4,000
Variable Costs = 160
D. Tommy Hotel Hall
Fixed Costs = 12,000
Variable Costs = 90
Selling Price is 240 for both, Administrative cost is 7,000 and Band budget is 5,000
Solution
C. Bishoftu Ababa Exhibition Center D. Tommy Hotel Hall
Total Budget = 7,000 + 5,000 = 12,000 Total Budget = 7,000 + 5,000 = 12,000
FC = 4,000 + 12,000 = 16,000 FC = 12,000 + 12,000 = 24,000
VC = 160/unit VC = 90/unit
SP = 240/unit SP = 240/unit
SP – VC – FC = 0 SP – VC – FC = 0
240Q – 160Q – 16,000 = 0 240Q – 90Q – 24,000 = 0
80Q = 16,000 150Q = 24,000
Q = 16,000/80 = 200 tickets Q = 24,000/150 = 160 tickets
45 | P a g e
C. Bishoftu Ababa Exhibition Center D. Tommy Hotel Hall
SP*Q – VC*Q – FC SP*Q – VC*Q – FC
= (240*300) – (160*300) – 16,000 = (240*300) – (90*300) – 24,000
= 72,000 – 48,000 – 16,000 = 8,000 = 72,000 – 27,000 – 24,000 = 21,000
Project Two
2. Adjusting Entries
g. Supplies Expense ------890
Supplies -----------------890
(1,270 – 380)
h. Insurance Expense -----315
Prepaid Insurance ---------315
i. Depreciation Expense ----4,950
Accumulated Depreciation ------4,950
j. Wages Expense -------440
Wages Payable -----------440
k. Accounts Receivable ------1,000
Fees earned ---------------1,000
l. Unearned Fees --------500
Fees Earned ---------------500
(1,250 – 750)
GELETA PLC

Cash 3,425
Supplies 380
Account Payable 925
Wages Payable 440
Unearned fees 750
Fees Earned 60,625
Rent Expense 4,200
Depreciation Expense 4,950
46 | P a g e
Supplies Expense 890
Insurance Expense 315
Total 106,390 106,390
Huluka Company
Income Statement
Revenues:
Fees Earned ---------------------------------------------------------------------------------- 60,625
Expenses:
Wages Expense --------------------------------------------- 22,855
Depreciation Expense --------------------------------------- 4,950
Rent Expense ------------------------------------------------- 4,200
Utilities Expense --------------------------------------------- 2,715
Supplies Expense ---------------------------------------------- 890
Insurance Expense --------------------------------------------- 315
Miscellaneous Expense --------------------------------------- 1,505
Total Expense ---------------------------------------------------------------------------------- 37,430
Net Income -------------------------------------------------------------------------------------- 23,195
Huluka Company
Beginning Capital --------------------------------------------------------------- 29,000
Net Income -----------------------------------23,195
Less: Drawing ------------------------------- 5,200
Increase in Owner’s Equity --------------------------------------------------- 17,995
Ending Capital ------------------------------------------------------------------ 46,995
Huluka Company
Balance Sheet
47 | P a g e
Assets
Cash ------------------------------------ 3,425
Accounts Receivable ----------------- 8,000
Supplies -------------------------------- 380
Prepaid Insurance ------------------ 305
Equipment -----------51,650
Less: Acc. Depn -----14,65037,000
Total Assets ------------------------- 49,110
Liabilities
Accounts Payable ------------------- 925
Wages Payable ---------------------- 440
Unearned Fees ----------------------- 750
Total Liabilities -----------------------------2,115
Owner’s Equity
Capital -------------------------------------- 46,995
Total Liabilities ---------------------------- 49,110
Closing Entries
v. Fees Earned -------------------60,625
Income Summary ----------------60,625
vi. Income Summary ------------ 37,430

Wages Expense ---------------------- 22,855
Depreciation Expense --------------4,950
Rent Expense ------------------------ 4,200
Utilities Expense --------------------- 2,715
Supplies Expense --------------------- 890
Insurance Expense -------------------- 315
Miscellaneous Expense -------------- 1,505
vii. Income Summary ---------- 23,195
Capital ------------------------------ 23,195
viii. Capital --------------------- 5,200

Drawing ------------------------- 5,200
GELETA PLC
Post-Closing Trial Balance
48 | P a g e
Cash 3,425
Supplies 380
Account Payable 925
Wages Payable 440
Unearned fees 750
Total 63,760 63,760
Project Three
e. At a Point of Sale Method
Gross Profit ----------------------------------------------------- 240,000
f. Installment Method
= Gross Profit = 120,000 = 40%
1 Year Collection = 280,000* 40% = 112,000
st

Total 600,000240,000
Project Four
July 1: Inventory ----------------- 300 8 = 2,400
July 15: Purchase ---------------- 350 11 = 3,850
July 20: Purchase ---------------- 450 12 = 5,400
July 28: Purchase ---------------- 550 13 = 7,150
Total 1,650 18,800
Periodic FIFO
Most Recent, July 28 -------------- 550 * 13 = 7,150
Next Most Recent, July 20 --------- 80 * 12 = 960
Total 6308,110
49 | P a g e
= 18,800 – 8,110 = 10,690

= 1,020 * 20 = 20,400
Gross Profit = 20,400 – 10,690
= 9,710
Gross Profit -----------------------------------------------------------9,710
Less: General Expenses ( 2,500 – 900) --------------------------- 1,400
Income before Tax -------------------------------------------------- 8,310
Less: Business Profit Tax (30%*8,310) -------------------------- 2,493
Net Income ------------------------------------------------------------ 5,817
Project Five: Payroll

S. Name BS Allowance OT GE EIT PC CA TD NP Si
N Rep Fuel g
1 Dawit K. 5,500 750 4,000 - 10,250 2,312.5 330 550 3,192.5 7,057.5
2 Abebe A. 3,500 350 3,000 262.5 7,112.5 1,354.38 210 350 1,914.38 5,198.12
3 Chalyu T. 850 - - 79.69 929.69 91.95 - - 91.95 837.74
4 Meseret L. 2,800 150 2,000 262.5 5,212.5 806.25 168 280 1,254.25 3,958.25
5 Selam B. 1,500 - 1,000 140.63 2,640.63 210.63 90 75 375.63 2,265
Total 14,150 1,250 10,000 745.32 26,145.32 4,775.71 798 1,255 6,828.71 19,316.61
Journal Entries
Pension Payable………………………….. 798
Credit Association Payable ……………… 1,255
Cash………………………………………. 19,316.61

(13,300* 8% = 1,064)

Credit Association Payable ……… 1,255
Cash………………………………… 1,255
50 | P a g e
Cash……………………………………… 7,265.40
51 | P a g e

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Level IV Code 1

Bank Statement for April

Check accompanying April Bank Statement

Bank Memo Accompanying April Bank Statement

Estimated Sales in unit during the current quarter:

January February March Total

2. Material issued and direct factory labor cost used

S. Name Earnings Gross Deductions Total Net Pay Sign

2. To record the Payroll Tax (Employer’s Pension) Expense:

3. To record the Abay Dam Payment

Project Two: Accounting Cycle

Project Three: Bank Reconciliation

Balance per Depositor’s Records……………………………………………..…… 7,108.32

Project Four: Cost Accounting

S.N Types of Product Selling Sold Units Sold Total Revenues

2. Prepare Production Budget

Production Budget = Budget Sales + Target Ending FGI – Beginning FGI

Budgeted units Sales (A+B)……………………………………37,550 (30,000 + 7,750)

Add: Ending Finished Goods Inventory (FGI)…………………30,000 (20,000 + 10,000)

Total Required Units………………………………….………. 67,550

Less: Beginning Finished Goods Inventory (FGI)…………....30,000 (21,000 + 9,000)

Units of Finished Goods to be Produced……………………….37, 550

3. Prepare Raw Material Purchase Budget

Purchase of DM = DM used in Prodn + End. Inventory of DM – Beg. Inventory of DM

Activity Materials Total

Physical Units Budget to be used in

Total Requirements…………………. 42,475 54,950 154,750

Less: Beginning Inventory…………. 30,000 30,000 30,000

12,475 24,950 124,750 162,175

1. Record the necessary journal entry for the above transactions.

(B) Accrued Payroll (for Labor Cost)

MARU Merchandising Company

2. Calculate the VAT Receivable of VAT Payable

VAT Payable = Out VAT – Input VAT

3. Prepare Income Statement for the tax purpose

MARU Merchandising Company

Units Remained on Hand = UAFS – Units Sold

Earliest Costs, Oct 1…………..15@30…………450

Cost of Goods Sold

Cost of Goods Sold

Cost of Ending Inventory

PROJECT ONE: PROCESS PAYROLL

PROJECT TWO: SALE BUDGET

Project Four: Bank Reconciliation

Answer for Exam Two

4 Niguse 1,455 - 218.25 1,673.25 217.15 - - 217.15 1,456.10

Prepared by ___________ Checked by ________ Approved By___________

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

3. To record the credit association payable

Cash (Collection) Budget

Determine the Receivable Balance

Balance per Depositor Record-----------------------------------------------------------47,330

NB: Selling Price = 120 for both centers

Account Title DrCr

Project Three: Payroll

Project Four: Bank Reconciliation

Project Five: Revenue Recognition Method

Project Six: Inventory System

Answer for Exam Three

If 150 customer attended

If 300 customer attended

ii. Income Summary ------------ 37,430

iii. Income Summary ---------- 23,195

iv. Capital --------------------- 5,200

Prepared by _ Checked by Approved By_

Prepared by _ Checked by Approved By_