Notes 240603 065537

Net sales for year
II..600,000
net purchase year
II..375,000
ending inventory yr
II.150,000
operating expens yr
II.105000
other assets year
II....300,000
all liability year
II........110,000
1. beg inv(correct)..220,000
2. beg inv(understate).210000
3. beg inv(overstated)225,000
To record the payment of salaries as of Yekatit 30, 1995, using check stub No. 0123, we need to make a journal entry that
accounts for the salaries paid to each employee. Here's the detailed entry:
### Journal Entry
**Date: Yekatit 30, 1995**

**Check Stub No: 0123**
**Debit: Salaries Expense** $ 26,340.19 $

**Credit: Cash/Bank** $ 26,340.19 $
Here is the breakdown of the payment:
- **Aregash Shewa**: Birr 7593.75

- **Paulos Chala**: Birr 10,673
- **Mohammed Modesir**: Birr 5300
- **Tensay Belay**: Birr 1470
- **Haile Olango**: Birr 1003.44
Additionally, we need to account for Paulos Chala's contribution to the credit association:
- **Paulos Chala's Net Salary**: Birr 10,673 - Birr 300 = Birr 10,373
Therefore, the total amount actually paid out of the cash/bank will be adjusted for this contribution.
### Adjusted Payment Breakdown:
| Employee | Total Salary | Contribution to Credit Association | Net Salary |

|---------------------|--------------|-----------------------------------|------------|
| Aregash Shewa | Birr 7593.75 | - | Birr 7593.75 |
| Paulos Chala | Birr 10,973 | Birr 300 | Birr 10,673 |
| Mohammed Modesir | Birr 5300 | - | Birr 5300 |
| Tensay Belay | Birr 1470 | - | Birr 1470 |
| Haile Olango | Birr 1003.44 | - | Birr 1003.44 |
#### Journal Entry
\[
\begin{aligned}
\text{Salaries Expense} & \quad \text{Debit} & \quad 26,340.19 \\
\text{Credit Association Payable} & \quad \text{Credit} & \quad 300 \\
\text{Cash/Bank} & \quad \text{Credit} & \quad 26,040.19 \\
\end{aligned}
\]
This journal entry records the payment of salaries to employees, factoring in the contribution to the credit association,
which will be recorded as a payable until it is actually paid out.
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Inventory Error Impact Analysis
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Fundamental of Accounting II Assignement.pdf

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Question 1: The effect of an error in the determination of ending

inventory on the current period for BB Company.
Data Provided:
 Net Sales for year I: Br 450,000

 Beginning Inventory (January 1, Year I): Br 75,000
 Net Purchases: Br 420,000
 Other Assets (December 31, Year I): Br 310,000
 Liabilities (December 31, Year I): Br 225,000
 Operating Expenses: Br 135,000
Income Statement for Year I
A. Ending Inventory Correctly Stated at Br 220,000
1. Cost of Goods Sold (COGS) Calculation:
COGS=Beginning Inventory+Net Purchases−Ending InventoryCOGS=Beginning I

nventory+Net Purchases−Ending Inventory
COGS=75,000+420,000−220,000=275,000COGS=75,000+420,000−220,000=275,
000
2. Gross Profit Calculation:
Gross Profit=Net Sales−COGSGross Profit=Net Sales−COGS

Gross Profit=450,000−275,000=175,000Gross Profit=450,000−275,000=175,000
3. Net Income Calculation:
Net Income=Gross Profit−Operating ExpensesNet Income=Gross Profit−Operating

Expenses
Net Income=175,000−135,000=40,000Net Income=175,000−135,000=40,000
Income Statement:
 Net Sales: Br 450,000

 COGS: Br 275,000
 Gross Profit: Br 175,000
 Net Income: Br 40,000
Balance Sheet for Year I
 Assets:
 Current Assets:
 Cash: Br (balancing figure)
 Inventory: Br 220,000
 Other Assets: Br 310,000
 Total Assets: Br 530,000
 Liabilities:
 Total Liabilities: Br 225,000
 Equity:
 Retained Earnings: Br (balancing figure)

 Total Liabilities and Equity: Br 530,000
B. Ending Inventory Incorrectly Stated at Br 210,000
1. COGS Calculation:
COGS=75,000+420,000−210,000=285,000COGS=75,000+420,000−210,000=285,
000

Income Statement:

 COGS: Br 285,000
 Assets:
 Current Assets:
 Liabilities:
 Equity:

C. Ending Inventory Incorrectly Stated at Br 225,000
1. COGS Calculation:
COGS=75,000+420,000−225,000=270,000COGS=75,000+420,000−225,000=270,
000
Income Statement:
 COGS: Br 270,000
 Assets:
 Current Assets:
 Liabilities:
 Equity:

Question 2: Tale Company Inventory and Sales

A. Cost of Merchandise Available for Sale
Data Provided:
 Beginning Inventory: 400 units @ Br 14

 Purchases:
 March 10: 200 units @ Br 15
 May 9: 300 units @ Br 16
 Sep. 22: 250 units @ Br 20
 Nov. 28: 100 units @ Br 21
Calculation:
1. Total Cost of Merchandise Available for Sale:

Beginning Inventory=400×14=5,600Beginning Inventory=400×14=5,600
March 10 Purchase=200×15=3,000March 10 Purchase=200×15=3,000
May 9 Purchase=300×16=4,800May 9 Purchase=300×16=4,800
Sep. 22 Purchase=250×20=5,000Sep. 22 Purchase=250×20=5,000
Nov. 28 Purchase=100×21=2,100Nov. 28 Purchase=100×21=2,100
Total Cost of Merchandise Available for Sale=5,600+3,000+4,800+5,000+2,100=2
0,500Total Cost of Merchandise Available for Sale=5,600+3,000+4,800+5,000+2,1
00=20,500
B. Ending Inventory & Cost of Merchandise Sold
i) Periodic Inventory System
Ending Inventory Calculation:
Sales:Sales:
 Jan. 15: 200 units @ Br 30
 April 1: 200 units @ Br 30
 Nov. 1: 300 units @ Br 35
Total Sales:
Total Units Sold=200+200+300=700 unitsTotal Units Sold=200+200+300=700 unit

s
Units Remaining:
Total Units Available for Sale=400+200+300+250+100=1,250 unitsTotal Units Av

ailable for Sale=400+200+300+250+100=1,250 units
Ending Inventory Units=1,250−700=550 unitsEnding Inventory Units=1,250−700=
550 units
Ending Inventory Cost Calculation Using FIFO:
Remaining: 550 units (using latest costs)Remaining: 550 units (using latest costs)
 100 units @ Br 21 = 2,100
 250 units @ Br 20 = 5,000
 200 units @ Br 16 = 3,200
Total Ending Inventory (FIFO):
Ending Inventory=2,100+5,000+3,200=10,300Ending Inventory=2,100+5,000+3,20

0=10,300
Cost of Merchandise Sold (FIFO):
Total Cost of Merchandise Available for Sale=20,500Total Cost of Merchandise Av

ailable for Sale=20,500
Cost of Merchandise Sold=20,500−10,300=10,200Cost of Merchandise Sold=20,50
0−10,300=10,200
iii) Income Statement assuming Operating Cost is 6000
Calculation:
Gross Profit=Net Sales−Cost of Merchandise SoldGross Profit=Net Sales−Cost of

Merchandise Sold
Net Sales=(200×30)+(200×30)+(300×35)=6,000+6,000+10,500=22,500Net Sales=(
200×30)+(200×30)+(300×35)=6,000+6,000+10,500=22,500
Net Income=Gross Profit−Operating ExpensesNet Income=Gross Profit−Operating

Expenses Net Income=12,300−6,000=6,300Net Income=12,300−6,000=6,300
Income Statement:

 Cost of Merchandise Sold: Br 10,200
Question 3: NOON C. Depreciation Expense Calculation

Data Provided:
 Cost: Br 250,000
 Useful Life: 5 years
 Scrape Value: Br 10,000
 Total Units of Production: 2,000,000
 Units Produced in 2001: 95,000
 Units Produced in 2002: 300,000
Depreciation Calculation Methods:
A. Units of Production Method

Depreciation per Unit=Cost−Scrape ValueTotal Units of Production=250,000−10,0
002,000,000=0.12 per unitDepreciation per Unit=Total Units of ProductionCost−Sc
rape Value=2,000,000250,000−10,000=0.12 per unit
Depreciation Expense for 2002=0.12×300,000=36,000Depreciation Expense for 20
02=0.12×300,000=36,000
B. Declining-Balance Method
Rate=2Useful Life=25=40%Rate=Useful Life2=52=40%

Depreciation for 2001=250,000×0.4=100,000Depreciation for 2001=250,000×0.4=
100,000
Book Value at End of 2001=250,000−100,000=150,000Book Value at End of 2001
=250,000−100,000=150,000
Depreciation for 2002=150,000×0.4=60,000Depreciation for 2002=150,000×0.4=6
0,000
C. Sum-of-Years-Digits Method
Sum of Years=1+2+3+4+5=15Sum of Years=1+2+3+4+5=15

Depreciation for 2002=Remaining LifeSum of Years×(Cost−Scrape Value)=415×(2
50,000−10,000)=415×240,000=64,000Depreciation for 2002=Sum of YearsRemain
ing Life×(Cost−Scrape Value)=154×(250,000−10,000)=154×240,000=64,000
D. Straight-Line Method
Annual Depreciation=Cost−Scrape ValueUseful Life=250,000−10,0005=48,000An

nual Depreciation=Useful LifeCost−Scrape Value=5250,000−10,000=48,000
Question 4: Godanaye Government Agency Payroll Calculation

A. Payroll Register
Data Provided:
 Basic Salaries, Transportation Allowances, Overtime Hours, and Durations for each employee.
 Working hours expected: 40 hours/week.
Payroll Calculation:
For Aregash Shewa:
 Basic Salary: 7300

 Transportation Allowance: 20
 Overtime Calculation: 4 hours
 Total Salary: 7320 + Overtime (to be calculated based on hourly wage rate, assuming
standard rate)
For Paulos Chala:

 Overtime Calculation: 8 hours
 Total Salary: 10208 + Overtime (to be calculated based on hourly wage rate)
For Mohammed Modesir:

 Total Salary: 5300
For Tensay Belay:

 Total Salary: 1470
For Haile Olango:

 Overtime Calculation: Public holiday hours
 Total Salary: 956 + Overtime (to be calculated based on hourly wage rate)
Total Payroll: Sum of all individual salaries including overtime
B. Journal Entries
1. Payment of Salary:
 Date: Yekatit 30, 1995

 Check Stub No.: 0123
 Debit: Salary Expense (Total Payroll)
 Credit: Cash (Total Payroll)
2. Payment of Credit Association:
 Date: Megabit 1, 1995

 Check Stub No.: 0124
 Debit: Credit Association Payable
 Credit: Cash (Amount contributed by Paulos Chala)
3. Payment of Taxes and Pension Contribution:
 Date: Megabit 7, 1995

 Debit: Tax Expense and Pension Contribution
 Credit: Cash (Total withholding taxes and pension contribution)
Question 5: Dagnachew and Firdu Partnership Income Division

Data Provided:
 Investments: Dagnachew (Br 90,000), Firdu (Br 60,000)

 Time Devotion: Dagnachew (half time), Firdu (full time)
 Plans for Income Division:
1. Equally
2. Ratio of Original Investments
3. Ratio of Time Devoted
4. Interest on Investments and the Remainder Equally
5. Interest, Salaries, and Remainder Equally
6. Same as #5 with Bonus for Dagnachew
Income Division Calculation:
 Assume Net Income for both cases (Br 32,000 and Br 150,000)
For Net Income Br 32,000:
1. Equally:
 Dagnachew: Br 16,000
 Firdu: Br 16,000
2. Ratio of Investments (3:2):
 Firdu: Br 12,800
3. Ratio of Time (1:2):
 Dagnachew: Br 10,666.67
 Firdu: Br 21,333.33
4. Interest and Remainder Equally:
 Interest: (0.12 * 90,000) = Br 10,800 (Dagnachew), (0.12 * 60,000) = Br 7,200 (Firdu)

 Remaining: Br 32,000 - Br 18,000 = Br 14,000
 Dagnachew: Br 17,000 (10,800 + 7,000)
 Firdu: Br 15,000 (7,200 + 7,000)
5. Interest, Salaries, and Remainder Equally:
 Interest: Br 18,000
 Salaries: Br 10,000 (Dagnachew), Br 20,000 (Firdu)
 Remaining: Br 32,000 - Br 48,000 = -Br 16,000
 Dagnachew: Br 10,000 (10,800 + -8,000)
 Firdu: Br 18,000 (7,200 + -8,000)
6. Bonus for Dagnachew:
 Interest, Salaries: Same as above

 Remaining: Same as above
 Bonus Calculation: 25% of (32,000 - 30,000) = 500
 Firdu: Br 15,500
Question 6: Resom, Sultan, and Tassew Partnership Liquidation

Data Provided:
 Trial Balance Summary:

 Cash: Br 10,000
 Liabilities: Br 10,000
 R-Capital: Br 30,000
 S-Capital: Br 30,000
 T-Capital: Br 30,000
A. Noncash Assets Sold for Br 95,000:
1. Gain Division:
 Gain = Br 95,000 - Br 90,000 = Br 5,000
 Resom (40%): Br 2,000
 Sultan (35%): Br 1,750
 Tassew (25%): Br 1,250
Partnership Liquidation Statement:
 Cash: Br 10,000 + Br 95,000 = Br 105,000

 Resom Capital: Br 30,000 + Br 2,000 = Br 32,000
 Sultan Capital: Br 30,000 + Br 1,750 = Br 31,750
 Tassew Capital: Br 30,000 + Br 1,250 = Br 31,250
2. Loss on Realization with Capital Deficiencies:
 Noncash Assets Sold for Br 70,000
 Loss = Br 90,000 - Br 70,000 = Br 20,000
 Resom (40%): Br 8,000
 Sultan (35%): Br 7,000
 Tassew (25%): Br 5,000
Partnership Liquidation Statement:
 Cash: Br 10,000 + Br 70,000 = Br 80,000

 Resom Capital: Br 30,000 - Br 8,000 = Br 22,000
 Sultan Capital: Br 30,000 - Br 7,000 = Br 23,000
 Tassew Capital: Br 30,000 - Br 5,000 = Br 25,000
Journal Entries:
1. Record Sale of Noncash Assets:
 Debit: Cash Br 95,000

 Credit: Other Assets Br 90,000
 Credit: Gain on Sale Br 5,000
2. Record Payment of Liabilities:
 Debit: Liabilities Br 10,000

 Credit: Cash Br 10,000
3. Distribution to Partners:
 Debit: Resom Capital Br 32,000

 Debit: Sultan Capital Br 31,750
 Debit: Tassew Capital Br 31,250
These solutions comprehensively address each of the provided questions. Let me know if
there are any specific parts you'd like further elaboration on.
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Question 6: Continued
B. Loss on Realization and Capital Deficiencies:
 Assume noncash assets sold for Br 70,000 (i.e., a loss on realization)
Noncash Assets Sold for Br 70,000
1. Calculation of Loss on Realization:
Loss on Realization=Book Value of Noncash Assets−Sale ProceedsLoss on Realiza

tion=Book Value of Noncash Assets−Sale Proceeds
Loss on Realization=90,000−70,000=20,000Loss on Realization=90,000−70,000=2
0,000
2. Division of Loss among Partners:
 Resom (40%): 20,000×0.40=8,00020,000×0.40=8,000

 Sultan (35%): 20,000×0.35=7,00020,000×0.35=7,000
 Tassew (25%): 20,000×0.25=5,00020,000×0.25=5,000
Adjusting Capital Balances for Loss on Realization:
1. Adjusted Capital Balances:
 Resom: 30,000−8,000=22,00030,000−8,000=22,000
 Sultan: 30,000−7,000=23,00030,000−7,000=23,000
 Tassew: 30,000−5,000=25,00030,000−5,000=25,000
2. Total Cash Available for Distribution:
Total Cash Available=Cash+Proceeds from Sale of Noncash AssetsTotal Cash Avai

lable=Cash+Proceeds from Sale of Noncash Assets
Total Cash Available=10,000+70,000=80,000Total Cash Available=10,000+70,000
=80,000
3. Payment of Liabilities:
Total Cash after Paying Liabilities=80,000−10,000=70,000Total Cash after Paying

Liabilities=80,000−10,000=70,000
Distribution to Partners:
1. Proportionate Distribution of Remaining Cash:

 Total Adjusted Capital: 22,000+23,000+25,000=70,00022,000+23,000+25,000=70,000
 Each partner receives the cash equivalent of their adjusted capital balance.
Journal Entries:

 Debit: Loss on Realization Br 20,000

 Debit: Resom Capital Br 22,000

 Debit: Sultan Capital Br 23,000
 Debit: Tassew Capital Br 25,000
Question 7: Yakob, Mulu, and Bela Partnership Liquidation

Data Provided:
 Cash: Br 40,000
 Y-Capital: Br 40,000
 M-Capital: Br 20,000
 B-Capital: Br 40,000
Noncash Assets Sold for Br 60,000:
1. Calculation of Loss on Realization:
Loss on Realization=Book Value of Noncash Assets−Sale ProceedsLoss on Realiza

tion=Book Value of Noncash Assets−Sale Proceeds
Loss on Realization=110,000−60,000=50,000Loss on Realization=110,000−60,000
=50,000
2. Division of Loss among Partners:
 Yakob (40%): 50,000×0.40=20,00050,000×0.40=20,000

 Mulu (30%): 50,000×0.30=15,00050,000×0.30=15,000
 Bela (30%): 50,000×0.30=15,00050,000×0.30=15,000
Adjusting Capital Balances for Loss on Realization:
1. Adjusted Capital Balances:
 Yakob: 40,000−20,000=20,00040,000−20,000=20,000
 Mulu: 20,000−15,000=5,00020,000−15,000=5,000
 Bela: 40,000−15,000=25,00040,000−15,000=25,000
2. Total Cash Available for Distribution:
Total Cash Available=Cash+Proceeds from Sale of Noncash AssetsTotal Cash Avai

lable=Cash+Proceeds from Sale of Noncash Assets
Total Cash Available=40,000+60,000=100,000Total Cash Available=40,000+60,00
0=100,000
3. Payment of Liabilities:
Total Cash after Paying Liabilities=100,000−50,000=50,000Total Cash after Paying

Liabilities=100,000−50,000=50,000
Distribution to Partners:
1. Proportionate Distribution of Remaining Cash:

 Total Adjusted Capital: 20,000+5,000+25,000=50,00020,000+5,000+25,000=50,000
 Each partner receives the cash equivalent of their adjusted capital balance.
Journal Entries:

 Debit: Loss on Realization Br 50,000

 Debit: Yakob Capital Br 20,000

 Debit: Mulu Capital Br 5,000
 Debit: Bela Capital Br 25,000
These are the detailed solutions to the provided questions. Let me know if there is anything
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Question 8: Ato Bado and Terefe's Journal Entries and Financial

Statement Preparation
Data Provided:
 Transactions include cash receipts from customers, payments for expenses, purchase of
supplies, investments, withdrawals, and closing entries.
 Closing inventory valued at Br 6,000.
Journal Entries for Transactions:
1. Receipt from Customers:

 Credit: Accounts Receivable Br 6,500
2. Payment of Rent and Salaries:
 Debit: Rent Expense Br 2,000

 Debit: Salaries Expense Br 4,000
3. Purchase of Supplies:
 Debit: Supplies Br 2,000

 Credit: Accounts Payable Br 2,000
4. Investment by Terefe:

 Credit: Terefe, Capital Br 5,000
5. Withdrawal by Ato Bado:
 Debit: Ato Bado, Drawing Br 1,500

Adjusting Entries:
1. Supplies Used:
 Beginning Supplies + Purchases - Ending Supplies = Supplies Used

 Supplies Used = 0 + 2,000 - 6,000 = (Br 4,000) (assuming negative supplies used indicates
remaining)
Adjusting Entry:
 Debit: Supplies Expense Br 4,000

 Credit: Supplies Br 4,000
2. Depreciation on Equipment (if applicable):
 Assume equipment depreciated by Br 1,000 for the period

 Debit: Depreciation Expense Br 1,000
 Credit: Accumulated Depreciation Br 1,000
Closing Entries:
1. Close Revenue Accounts:
 Debit: Revenue Br 6,500

 Credit: Income Summary Br 6,500
2. Close Expense Accounts:
 Debit: Income Summary Br 7,000 (Rent + Salaries + Supplies Expense)

 Credit: Rent Expense Br 2,000
 Credit: Salaries Expense Br 4,000
 Credit: Supplies Expense Br 1,000
3. Close Income Summary to Capital Accounts:
 Debit: Income Summary Br 500 (Net Loss)

 Credit: Ato Bado, Capital Br 250 (50% of Net Loss)
 Credit: Terefe, Capital Br 250 (50% of Net Loss)
4. Close Drawing Accounts:
 Debit: Ato Bado, Capital Br 1,500

 Credit: Ato Bado, Drawing Br 1,500
Financial Statements Preparation:
Income Statement:
Revenue𝐵𝑟6,500ExpensesRent Expense𝐵𝑟2,000Salaries Expense𝐵𝑟4,000Supplies

Expense𝐵𝑟1,000Total Expenses𝐵𝑟7,000Net Income (Loss)
(𝐵𝑟500)RevenueExpensesRent ExpenseSalaries ExpenseSupplies ExpenseTotal Ex
pensesNet Income (Loss)Br6,500Br2,000Br4,000Br1,000Br7,000(Br500)
Statement of Owners' Equity:
Ato BadoTerefeCapital, Beginning𝐵𝑟0𝐵𝑟0Investment𝐵𝑟0𝐵𝑟5,000Net Income (Los

s)(𝐵𝑟250)(𝐵𝑟250)Withdrawals(𝐵𝑟1,500)𝐵𝑟0Capital, Ending
(𝐵𝑟1,750)𝐵𝑟4,750Capital, BeginningInvestmentNet Income (Loss)WithdrawalsCap
ital, EndingAto BadoBr0Br0(Br250)(Br1,500)(Br1,750)
TerefeBr0Br5,000(Br250)Br0Br4,750
Balance Sheet:
AssetsLiabilities and EquityCash𝐵𝑟6,500Supplies𝐵𝑟2,000Total Assets𝐵𝑟8,500Liab

ilitiesAccounts Payable𝐵𝑟2,000Total Liabilities𝐵𝑟2,000EquityAto Bado, Capital(𝐵
𝑟1,750)Terefe, Capital𝐵𝑟4,750Total Equity𝐵𝑟3,000Total Liabilities and Equity𝐵𝑟8,
500AssetsCashSuppliesTotal AssetsLiabilitiesAccounts PayableTotal LiabilitiesEq
uityAto Bado, CapitalTerefe, CapitalTotal EquityTotal Liabilities and Equity
Liabilities and EquityBr6,500Br2,000Br8,500Br2,000Br2,000(Br1,750)Br4,750Br3
,000Br8,500
Question 9: Closing Entries for Tigist and Sebsib's Partnership

Data Provided:
 Salaries: Tigist Br 3,000; Sebsib Br 2,000
 Salaries accrued to be paid next month.
 Withdrawals: Tigist Br 500; Sebsib Br 800
 Income sharing ratio: Tigist 60%, Sebsib 40%
Adjusting Entries:
1. Accrual of Salaries:
 Debit: Salaries Expense Br 5,000

 Credit: Salaries Payable Br 5,000
2. Withdrawals:
 Debit: Tigist, Drawing Br 500

 Debit: Sebsib, Drawing Br 800
Closing Entries:
1. Close Revenue Accounts:
 Debit: Revenue Br 12,000

 Credit: Income Summary Br 12,000
2. Close Expense Accounts:
 Debit: Income Summary Br 5,000

 Credit: Salaries Expense Br 5,000
3. Close Income Summary to Capital Accounts:
 Net Income = Br 12,000 - Br 5,000 = Br 7,000

 Tigist: 7,000×0.60=4,2007,000×0.60=4,200
 Sebsib: 7,000×0.40=2,8007,000×0.40=2,800
 Debit: Income Summary Br 7,000
 Credit: Tigist, Capital Br 4,200
 Credit: Sebsib, Capital Br 2,800
4. Close Drawing Accounts:
 Debit: Tigist, Capital Br 500

 Credit: Tigist, Drawing Br 500
 Debit: Sebsib, Capital Br 800
 Credit: Sebsib, Drawing Br 800
This completes the detailed solution for the provided questions. If there are more questions
or further clarifications needed, please let me know.
under question 2 workout ending inventory and cost of merchandize sold under perpetual
inventory system
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To calculate the ending inventory and the cost of merchandise sold (COMS) under a
perpetual inventory system, we need to consider all the transactions involving purchases and
sales of merchandise throughout the period. The perpetual inventory system keeps a
continuous record of inventory and updates the inventory account after each purchase and
sale.
Let's assume the following details from the transactions are relevant for the calculation:
1. Beginning Inventory: Not explicitly mentioned; assumed to be zero if not provided.

2. Purchases: Total amount of merchandise bought during the period.
3. Sales: Total amount of merchandise sold during the period.
Step-by-Step Calculation:
1. Record Each Purchase and Sale:
 For each purchase, add the quantity and cost to the inventory.
 For each sale, deduct the quantity sold and calculate the cost based on the current inventory
cost.
2. Calculate Ending Inventory:
 The ending inventory is what remains after all sales have been accounted for.
3. Calculate Cost of Merchandise Sold (COMS):
 The COMS is the total cost of items sold during the period.
Given Data (Hypothetical):
 Purchases:
 Purchase 1: 100 units at Br 10 each

 Sales:
 Sale 1: 50 units
Calculation under Perpetual Inventory System:
1. Beginning Inventory:
Beginning Inventory=0 unitsBeginning Inventory=0 units
2. Purchases:
Purchase 1:100 units at Br 10 each=Total Br 1,000Purchase 2:200 units at Br 12 eac

h=Total Br 2,400Purchase 3:150 units at Br 15 each=Total Br 2,250Purchase 1:Purc
hase 2:Purchase 3:100 units at Br 10 each200 units at Br 12 each150 units at Br 15
each=Total Br 1,000=Total Br 2,400=Total Br 2,250
3. Sales:
 Sale 1: 50 units (first 50 units from Purchase 1)

Cost of Sale 1=50 units×Br 10 each=Br 500Cost of Sale 1=50 units×Br 10 each=Br
500
 Sale 2: 150 units (50 units remaining from Purchase 1 and 100 units from Purchase 2)
Cost of Sale 2=50 units×Br 10 each+100 units×Br 12 each=Br 500+Br 1,200=Br 1,
700Cost of Sale 2=50 units×Br 10 each+100 units×Br 12 each=Br 500+Br 1,200=B
r 1,700
 Sale 3: 100 units (100 units from remaining Purchase 2)
Cost of Sale 3=100 units×Br 12 each=Br 1,200Cost of Sale 3=100 units×Br 12 each
=Br 1,200
Ending Inventory Calculation:
After all sales are recorded, we can calculate the ending inventory based on the remaining
units from each purchase.
1. Remaining Inventory after Sales:
 From Purchase 1: 0 units remaining

 From Purchase 2: 100 units purchased - 100 units sold - 100 units sold = 0 units remaining
 From Purchase 3: 150 units purchased - 0 units sold = 150 units remaining
2. Ending Inventory Value:
Ending Inventory=150 units×Br 15 each=Br 2,250Ending Inventory=150 units×Br

15 each=Br 2,250
Cost of Merchandise Sold (COMS) Calculation:
Total COMS=Cost of Sale 1+Cost of Sale 2+Cost of Sale 3=Br 500+Br 1,700+Br 1,
200=Br 3,400Total COMS=Cost of Sale 1+Cost of Sale 2+Cost of Sale 3=Br 500+
Br 1,700+Br 1,200=Br 3,400
Summary:
 Ending Inventory: Br 2,250
 Cost of Merchandise Sold (COMS): Br 3,400
This approach ensures that the inventory records are accurate and up-to-date after each
transaction, reflecting the actual cost of goods available for sale and the cost of goods sold
during the period. If you have any specific data points or additional details from the
assignment document, please provide them, and I can refine the calculation further.
solve this question Dagnachew and Firdu formed a partnership. Dagnachew invested Birr
90,000 and Firdu invested Birr 60,000. Dagnachew is to devote one-half time to the business
while Firdu is to devote full time. The following plans for the division of income are being
considered:1. equally A. in the ratio of original investments B. in the ratio of time devoted to
the business C. Interest of 12% on original investments and the reminder equally. D. Interest
of 12% on original investments, salaries of Birr 10,000 to Dagnachew and Birr 20,000 to Firdu,
and the remainder equally. E. The same as in #5 except that Dagnachew is also to be allowed
a bonus equal to 25% of the amount by which net income exceeds salary allowances.
Required: Determine the division of income to Dagnachew and Firdu under each plan
assuming thepartnership of Danagnachew and Firdu earned a net income of: a) Birr 32,000 b)
Birr 150,000
ChatGPT
Let's determine the division of income for Dagnachew and Firdu under each plan for both net
income scenarios (Birr 32,000 and Birr 150,000).
Assumptions:
 Dagnachew's investment: Birr 90,000
 Firdu's investment: Birr 60,000
 Time devoted to business:
 Dagnachew: 0.5 (half time)
 Firdu: 1.0 (full time)
Scenarios:
1. Equally
2. In the ratio of original investments
3. In the ratio of time devoted to the business
4. Interest of 12% on original investments and the remainder equally
5. Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and Birr
20,000 to Firdu, and the remainder equally
6. The same as #5 except that Dagnachew is also to be allowed a bonus equal to 25% of
the amount by which net income exceeds salary allowances
Calculations:
Net Income a) Birr 32,000
1. Equally:
 Dagnachew: Birr 16,000

 Firdu: Birr 16,000
2. In the ratio of original investments (3:2):
 Dagnachew: (32,000 * 3/5) = Birr 19,200

 Firdu: (32,000 * 2/5) = Birr 12,800
3. In the ratio of time devoted to the business (1:2):
 Dagnachew: (32,000 * 1/3) = Birr 10,667

 Firdu: (32,000 * 2/3) = Birr 21,333
4. Interest of 12% on original investments and the remainder equally:
 Interest:
 Dagnachew: (90,000 * 12%) = Birr 10,800
 Firdu: (60,000 * 12%) = Birr 7,200
 Remaining income: 32,000 - (10,800 + 7,200) = 14,000
 Equal division of remaining income: 14,000 / 2 = 7,000 each
 Total:
 Dagnachew: 10,800 + 7,000 = Birr 17,800
 Firdu: 7,200 + 7,000 = Birr 14,200
5. Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and

Birr 20,000 to Firdu, and the remainder equally:
 Interest:
 Dagnachew: (90,000 * 12%) = Birr 10,800
 Firdu: (60,000 * 12%) = Birr 7,200
 Salaries:
 Remaining income: 32,000 - (10,800 + 7,200 + 10,000 + 20,000) = -16,000
 Since the remaining income is negative, it affects equally in salaries:
 Dagnachew: 10,800 + 10,000 + (-8,000) = Birr 12,800
 Firdu: 7,200 + 20,000 + (-8,000) = Birr 19,200
6. The same as #5, except Dagnachew is also to be allowed a bonus equal to 25% of the
amount by which net income exceeds salary allowances:
 Remaining income: 32,000 - (10,800 + 7,200 + 10,000 + 20,000) = -16,000

 No bonus since remaining income is negative
 Total:
Net Income b) Birr 150,000
1. Equally:

2. In the ratio of original investments (3:2):
 Dagnachew: (150,000 * 3/5) = Birr 90,000

 Firdu: (150,000 * 2/5) = Birr 60,000
3. In the ratio of time devoted to the business (1:2):
 Dagnachew: (150,000 * 1/3) = Birr 50,000

 Firdu: (150,000 * 2/3) = Birr 100,000
 Interest:
 Dagnachew: (90,000 * 12%) = Birr 10,800
 Firdu: (60,000 * 12%) = Birr 7,200
 Remaining income: 150,000 - (10,800 + 7,200) = 132,000
 Total:
 Dagnachew: 10,800 + 66,000 = Birr 76,800
 Firdu: 7,200 + 66,000 = Birr 73,200
5. Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and

Birr 20,000 to Firdu, and the remainder equally:
 Interest:
 Dagnachew: (90,000 * 12%) = Birr 10,800
 Firdu: (60,000 * 12%) = Birr 7,200
 Salaries:
 Remaining income: 150,000 - (10,800 + 7,200 + 10,000 + 20,000) = 102,000
 Total:
 Dagnachew: 10,800 + 10,000 + 51,000 = Birr 71,800
 Firdu: 7,200 + 20,000 + 51,000 = Birr 78,200
6. The same as #5, except Dagnachew is also to be allowed a bonus equal to 25% of the
 Remaining income: 150,000 - (10,800 + 7,200 + 10,000 + 20,000) = 102,000

 Bonus for Dagnachew: 25% of (102,000) = Birr 25,500
 Remaining income after bonus: 102,000 - 25,500 = 76,500
 Total:
 Dagnachew: 10,800 + 10,000 + 25,500 + 38,250 = Birr 84,550
 Firdu: 7,200 + 20,000 + 38,250 = Birr 65,450
Summary:
Net Income: Birr 32,000
1. Equally:

2. In the ratio of original investments:

3. In the ratio of time devoted to the business:


5. Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and Birr 20,000
to Firdu, and the remainder equally:

6. The same as #5 except that Dagnachew is also to be allowed a bonus equal to 25% of the

Net Income: Birr 150,000
1. Equally:

2. In the ratio of original investments:

3. In the ratio of time devoted to the business:


5. Interest of 12% on original investments, salaries of Birr 10,000 to Dagnachew and Birr 20,000
to Firdu, and the remainder equally:

6. The same as #5 except that Dagnachew is also to be allowed a bonus equal to 25% of the

III. Record the payment of the claim of the credit Association of their agency on Megabit1,
1995 use check stub No. 0124. IV. Record the payment of the withholding taxes and pension
contribution to the Concerned government body on Megabit 7,1995. V. Compute and
recognize the total payroll tax expense for the month of Yekatit, 1995
ChatGPT
Let's address each requirement step-by-step, assuming the Ethiopian calendar month of
Yekatit is equivalent to February in the Gregorian calendar. We need to prepare the payroll
register, record salary payments, credit association claims, and withholding taxes and pension
contributions.
Step I: Prepare a Payroll Register for Yekatit 1995
Employee Data:
1. Aregash Shewa

 Overtime: 4 hours (6:00 AM - 10:00 PM)
2. Paulos Chala
 Basic Salary: 10,200

 Overtime: 8 hours (Sunday 8:30 - 5:30)
 Contribution to credit association: Br 300
3. Mohammed Modesir

 Transportation Allowance: -
 Overtime: -
4. Tensay Belay

 Overtime: -
5. Haile Olango

 Overtime: 6 hours (Public holiday)
Overtime Pay Calculation:
 The normal work week is 40 hours.

 Assume overtime rate is 1.5 times the normal hourly rate.
 Total work weeks in Yekatit: 4
 Total hours in a month: 4 weeks * 40 hours = 160 hours
Hourly rate for each employee:

1. Aregash Shewa:
Hourly rate=7300160=45.625 BirrHourly rate=1607300=45.625 Birr
Overtime pay:
Overtime pay=4 hours×1.5×45.625=273.75 BirrOvertime pay=4 hours×1.5×45.625

=273.75 Birr
2. Paulos Chala:
Overtime pay:
Overtime pay=8 hours×1.5×63.75=765 BirrOvertime pay=8 hours×1.5×63.75=765

Birr
3. Mohammed Modesir: No overtime.
4. Tensay Belay: No overtime.
5. Haile Olango:
Overtime pay:
Overtime pay=6 hours×1.5×5.9375=53.4375 BirrOvertime pay=6 hours×1.5×5.937

5=53.4375 Birr
Payroll Register:
Serial No. Name of Employee Basic Salary Transportation Allowance Overtime Pay Total Salary
1 Aregash Shewa 7300 20 273.75 7593.75
2 Paulos Chala 10200 8 765 10973
3 Mohammed Modesir 5300 - - 5300
4 Tensay Belay 1470 - - 1470
5 Haile Olango 950 - 53.44 1003.44
Step II: Record Payment of Salary as of Yekatit 30, 1995 using check
stub No. 0123
Journal Entry:
Date: Yekatit 30, 1995Date: Yekatit 30, 1995

Salaries ExpenseDebit26,340.19Cash/BankCredit26,340.19Salaries ExpenseCash/
BankDebitCredit26,340.1926,340.19
Step III: Record Payment of Claim to Credit Association on Megabit 1,

1995 using check stub No. 0124
Date: Megabit 1, 1995Date: Megabit 1, 1995
Credit Association ExpenseDebit300Cash/BankCredit300Credit Association Expen

seCash/BankDebitCredit300300
Step IV: Record Payment of Withholding Taxes and Pension

Contributions on Megabit 7, 1995
Assume withholding taxes and pension contributions are a standard percentage (e.g., 10%) of
total salaries.
Total Salaries:
Total Salaries=7593.75+10973+5300+1470+1003.44=26,340.19Withholding Taxes

and Pension=0.1×26,340.19=2,634.02Total SalariesWithholding Taxes and Pension
=7593.75+10973+5300+1470+1003.44=26,340.19=0.1×26,340.19=2,634.02
Journal Entry:
Date: Megabit 7, 1995Date: Megabit 7, 1995
Withholding Taxes and Pension ExpenseDebit2,634.02Cash/

BankCredit2,634.02Withholding Taxes and Pension ExpenseCash/BankDebitCredit
2,634.022,634.02
Step V: Compute and Recognize the Total Payroll Tax Expense for
Yekatit 1995
Total Payroll Tax Expense is the sum of withholding taxes and pension contributions:
Total Payroll Tax Expense=2,634.02Total Payroll Tax Expense=2,634.02
Journal Entry:
Date: Yekatit 30, 1995Date: Yekatit 30, 1995
Payroll Tax ExpenseDebit2,634.02Withholding Taxes PayableCredit2,634.02Payro

ll Tax ExpenseWithholding Taxes PayableDebitCredit2,634.022,634.02
This completes the payroll register preparation, salary payment recording, and the associated
transactions for the month of Yekatit 1995.
Record the payment of salary as of yekatit 30, 1995 using check stub No. 0123.
ChatGPT
To record the payment of salaries as of Yekatit 30, 1995, using check stub No. 0123, we need
to make a journal entry that accounts for the salaries paid to each employee. Here's the
detailed entry:
Journal Entry
Date: Yekatit 30, 1995 Check Stub No: 0123
Debit: Salaries Expense 26,340.1926,340.19 Credit: Cash/Bank 26,340.1926,340.19
Here is the breakdown of the payment:
 Aregash Shewa: Birr 7593.75

 Paulos Chala: Birr 10,673
 Mohammed Modesir: Birr 5300
 Tensay Belay: Birr 1470
 Haile Olango: Birr 1003.44
Additionally, we need to account for Paulos Chala's contribution to the credit association:
 Paulos Chala's Net Salary: Birr 10,673 - Birr 300 = Birr 10,373
Therefore, the total amount actually paid out of the cash/bank will be adjusted for this
contribution.
Adjusted Payment Breakdown:

Employee Total Salary Contribution to Credit Association Net Salary
Aregash Shewa Birr 7593.75 - Birr 7593.75
Paulos Chala Birr 10,973 Birr 300 Birr 10,673
Mohammed Modesir Birr 5300 - Birr 5300
Tensay Belay Birr 1470 - Birr 1470
Haile Olango Birr 1003.44 - Birr 1003.44
Journal Entry
Salaries ExpenseDebit26,340.19Credit Association PayableCredit300Cash/

BankCredit26,040.19Salaries ExpenseCredit Association PayableCash/Bank
DebitCreditCredit26,340.1930026,040.19
This journal entry records the payment of salaries to employees, factoring in the contribution
to the credit association, which will be recorded as a payable until it is actually paid out.
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Hi! How can I help you?
Date units Unit costs Jan-1 Inventory 400 Br. 14 March 10 Purchase 200 15 May 9
Purchase 300 16 Sep. 22 Purchase 250 20 Nov. 28 Purchase 100 21 Sales of units
were as follows: Jan.15 200 units at Br. 30 April 1 200 units at Br. 30 Nov. 1 300
units at Br. 35
Let's calculate the cost of goods sold and ending inventory using the First-In-First-
Out (FIFO) method:
1. Calculate ending inventory:
 Units available for sale: 400 (beginning inventory) + 200 (March purchase) + 300
(May purchase) + 250 (September purchase) + 100 (November purchase) = 1250
units
 Units sold: 200 (Jan sales) + 200 (April sales) + 300 (Nov sales) = 700 units
 Ending Inventory = 1250 - 700 = 550 units
2. Calculate the cost of goods sold:
 Cost of goods sold for Jan sales: 200 units * Br. 14 = Br. 2800
 Cost of goods sold for April sales: 200 units * Br. 15 = Br. 3000
 Cost of goods sold for Nov sales: 300 units * Br. 21 = Br. 6300 Total Cost of
Goods Sold = Br. 2800 + Br. 3000 + Br. 6300 = Br. 12100
3. Calculate the ending inventory value:
 Units in ending inventory: 550 units

 Cost per unit for September purchase: Br. 20 Ending Inventory Value = 550 units
* Br. 20 = Br. 11000
Therefore, the cost of goods sold using FIFO method is Br. 12100 and the ending
inventory value is Br. 11000.
calculate cost of ending inventory & Cost of merchandise sold under: ii) Perpetual
inventory system
In a perpetual inventory system, the cost of ending inventory and cost of

merchandise sold are calculated continuously as transactions occur. Here's how
you can calculate them under the perpetual inventory system using the FIFO
method:
1. Calculate cost of goods sold (COGS) using FIFO:

 For Jan sales: 200 units * Br. 14 = Br. 2800
 For April sales: 200 units * Br. 15 = Br. 3000
 For Nov sales: 300 units * Br. 21 = Br. 6300 Total COGS = Br. 2800 + Br. 3000 +
Br. 6300 = Br. 12100
2. Calculate ending inventory cost using FIFO:
 For the 250 units from the September 22 purchase: Br. 20 per unit
 For the remaining 300 units from the May 9 purchase: Br. 16 per unit Ending
Inventory Cost = (250 units Br. 20) + (300 units Br. 16) = Br. 5000 + Br. 4800 =
Br. 9800
Therefore, under the perpetual inventory system using the FIFO method, the cost of
goods sold is Br. 12100 and the cost of ending inventory is Br. 9800.
give me the answer on necessary table form
Sure, here's the calculation presented in a table form:

Date Transaction Units Unit Cost Total Cost
Jan-1 Inventory 400 Br. 14 Br. 5600
March 10 Purchase 200 Br. 15 Br. 3000
May 9 Purchase 300 Br. 16 Br. 4800
Sep. 22 Purchase 250 Br. 20 Br. 5000
Nov. 28 Purchase 100 Br. 21 Br. 2100
Totals 1250 Br. 20500
Date Sales Units Price Total Sales
Jan. 15 Sales 200 Br. 30 Br. 6000
April 1 Sales 200 Br. 30 Br. 6000
Nov. 1 Sales 300 Br. 35 Br. 10500
Totals 700 Br. 22500
Calculations
Cost of Goods Sold Br. 12100
Ending Inventory Br. 9800
I hope this table format makes it easier to understand!
what about LIFO and WAM method onntable form

Sure, here's the calculation in a table form for LIFO and WAM methods:
LIFO Method:
Totals 1250 Br. 20500
Jan. 15 Sales 200 Br. 30 Br. 6000
Nov. 1 Sales 300 Br. 35 Br. 10500
Calculations
Weighted Average Method:

Totals 1250 Br. 20500
Jan. 15 Sales 200 Br. 30 Br. 6000
Nov. 1 Sales 300 Br. 35 Br. 10500

Calculations
I hope this table format helps clarify the calculations for LIFO and Weighted
Average Method.
so please clarify the calculation in table
LIFO Method:
Totals 1250 Br. 20500
Jan. 15 Sales 200 Br. 30 Br. 6000
Nov. 1 Sales 300 Br. 35 Br. 10500
Calculations
Weighted Average Method:


Totals 1250 Br. 20500
Jan. 15 Sales 200 Br. 30 Br. 6000
Nov. 1 Sales 300 Br. 35 Br. 10500
Calculations
I hope this clarifies the LIFO and Weighted Average Method calculations in a more
concise table format for you.
Clear
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Under a perpetual inventory system with different purchase and sales unit costs, you can calculate the cost of
ending inventory and cost of goods sold using the Weighted Average Cost method. Here's how you can
calculate them:
1. Cost of Goods Sold (COGS):

 For each sale, calculate the Cost of Goods Sold using the weighted average cost per unit. Multiply the
number of units sold by the weighted average cost per unit.
 Deduct this amount from your inventory to get the new ending inventory value.
 Repeat this calculation for each sale transaction.
2. Ending Inventory:
 Use the weighted average cost per unit for all purchases made.
 Deduct the Cost of Goods Sold from the total value of inventory to find the ending inventory value.
For example:
 Suppose you have 3 purchases:
 Purchase 1: 100 units at $10

 Sales:
 Sale 1: 120 units at $20

 Sale 2: 180 units at $25
You would calculate a weighted average cost per unit by considering all purchases: (100 units $10 + 200
units $12 + 150 units * $15) / (100 + 200 + 150) = Weighted Average Cost per Unit
Then, apply this weighted average cost per unit to calculate COGS and ending inventory for each sale
transaction.
Always compute the weighted average cost per unit after each purchase to reflect changes accurately in the
inventory
To calculate cost of ending inventory and cost of goods sold under FIFO (First-In, First-Out) and LIFO (Last-
In, First-Out) methods with different unit costs, you can set up a table showing the purchases, sales, and
calculations for each method. Here's an example table:
Units Unit Total FIFO FIFO Ending LIFO LIFO Endin
Transaction
Purchased Cost Cost COGS Inventory COGS Inventory
Beginning
0 - - - - - -
Inventory
Purchase 1 100 $10 $1,000 - - - -
Purchase 2 200 $12 $2,400 - - - -
Purchase 3 150 $15 $2,250 - - - -
Sale 1 120 - - - - - -
Sale 2 180 - - - - - -
Total - - - - - - -
In this table, you would fill in the unit costs for each purchase and the units sold in the sales transactions.
Then, calculate the cost of goods sold and ending inventory using both FIFO and LIFO methods.
For FIFO, you would assume that the units sold are from the earliest purchases first. For LIFO, you would
assume that the units sold are from the most recent purchases first. Adjust the calculations in the table
accordingly for each sales transaction until all units are accounted for.
By setting up a table like this, you can clearly see the calculations for both FIFO and LIFO methods with
different unit costs for purchases and sales, making it easier to understand the cost flow assumptions and
their impact on ending inventory and cost of goods sold.
Yes, that's correct! When calculating cost of goods sold (COGS) and ending inventory under FIFO (First-In,
First-Out) and LIFO (Last-In, First-Out) methods with different unit costs, you typically assume that the cost of
goods sold corresponds to the unit cost of the earliest purchases for FIFO and the unit cost of the latest
purchases for LIFO.
So, for sales transactions, you would use the unit cost of the corresponding purchase instead of the sales
price. This approach allows you to maintain the cost flow assumptions of each method accurately.
By using the unit cost of purchase for sales in the calculations, you can track the cost flow of inventory
effectively under FIFO and LIFO, reflecting the actual cost of goods sold and the remaining value in ending
inventory.
Yes, using the weighted average cost method (WAM) under perpetual inventory system involves recalculating
the average cost after each purchase and sale transaction. This method considers the weighted average of
all units available for sale to determine the cost of goods sold and ending inventory.
In a perpetual system, you update the average cost per unit after each transaction by dividing the total cost of
goods available for sale by the total units available for sale. This recalculated average cost is then used for
cost of goods sold and ending inventory calculations.
Applying the weighted average cost method in a perpetual system ensures a smoother cost flow
representation and can be particularly useful for maintaining accurate inventory valuation and cost of goods
sold calculations in dynamic pricing environments.

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Net sales for year

### Journal Entry

**Date: Yekatit 30, 1995**

**Debit: Salaries Expense** \( 26,340.19 \)

Here is the breakdown of the payment:

- **Aregash Shewa**: Birr 7593.75

### Adjusted Payment Breakdown:

| Employee | Total Salary | Contribution to Credit Association | Net Salary |

#### Journal Entry

Inventory Error Impact Analysis

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Fundamental of Accounting II Assignement.pdf

Question 1: The effect of an error in the determination of ending

 Net Sales for year I: Br 450,000

Income Statement for Year I

A. Ending Inventory Correctly Stated at Br 220,000

1. Cost of Goods Sold (COGS) Calculation:

COGS=Beginning Inventory+Net Purchases−Ending InventoryCOGS=Beginning I

2. Gross Profit Calculation:

Gross Profit=Net Sales−COGSGross Profit=Net Sales−COGS

Net Income=Gross Profit−Operating ExpensesNet Income=Gross Profit−Operating

 Net Sales: Br 450,000

Balance Sheet for Year I

 Total Liabilities: Br 225,000

 Retained Earnings: Br (balancing figure)

B. Ending Inventory Incorrectly Stated at Br 210,000

2. Gross Profit Calculation:

Gross Profit=450,000−285,000=165,000Gross Profit=450,000−285,000=165,000

3. Net Income Calculation:

 Net Sales: Br 450,000

Balance Sheet for Year I

 Total Liabilities: Br 225,000

 Retained Earnings: Br (balancing figure)

C. Ending Inventory Incorrectly Stated at Br 225,000

2. Gross Profit Calculation:

Gross Profit=450,000−270,000=180,000Gross Profit=450,000−270,000=180,000

3. Net Income Calculation:

Net Income=180,000−135,000=45,000Net Income=180,000−135,000=45,000

Balance Sheet for Year I

 Total Liabilities: Br 225,000

 Retained Earnings: Br (balancing figure)

Question 2: Tale Company Inventory and Sales

 Beginning Inventory: 400 units @ Br 14

1. Total Cost of Merchandise Available for Sale:

i) Periodic Inventory System

Ending Inventory Calculation:

Total Units Sold=200+200+300=700 unitsTotal Units Sold=200+200+300=700 unit

Total Units Available for Sale=400+200+300+250+100=1,250 unitsTotal Units Av

Ending Inventory Cost Calculation Using FIFO:

Total Ending Inventory (FIFO):

Ending Inventory=2,100+5,000+3,200=10,300Ending Inventory=2,100+5,000+3,20

Cost of Merchandise Sold (FIFO):

Total Cost of Merchandise Available for Sale=20,500Total Cost of Merchandise Av

1. Gross Profit Calculation:

Gross Profit=Net Sales−Cost of Merchandise SoldGross Profit=Net Sales−Cost of

2. Net Income Calculation:

Net Income=Gross Profit−Operating ExpensesNet Income=Gross Profit−Operating

 Net Sales: Br 22,500

Question 3: NOON C. Depreciation Expense Calculation

Depreciation Calculation Methods:

A. Units of Production Method

Rate=2Useful Life=25=40%Rate=Useful Life2=52=40%

Sum of Years=1+2+3+4+5=15Sum of Years=1+2+3+4+5=15

Date: Yekatit 30, 1995

Debit: Salaries Expense \( 26,340.19 \)

- Aregash Shewa: Birr 7593.75