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.

Project Two: Prepare Business Documents& Financial Report

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Three years agoGadisa, Bona&Mesfinetablished GELETAPrivate LimitedCompany . 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

Account Title Debit Credit

Cash 3,425
Fees Receivable 7,000
Supplies 1,270
Prepaid Insurance 620
Office Equipment 51,650
Accumulated Deprecation 9,700
Account Payable 925
Unearned fees 1,250
Geleta, Capital 29,000
Geleta, Drawing 5,200
Fees Earned 59,125
Wages Expense 22,415
Rent Expense 4,200
Utilities Expense 2,715
Miscellanies Expense 1,505
Total 100,000 100,000

Additional Information
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:

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 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.
Thecollections 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

Additional Information
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

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 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

Additional Information
The corporation employees work 8hrs in aday 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 upto Br 1,000 enjoys taxexemption 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
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:

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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.

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