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Writing Accounting skills Essay
Answer five (5) of the following six (6) questions.
Question 1
- Journalize the following transactions and post them to ledger.From the following transactions of Phoenix Inc for Oct ,2016.
(i)Journalize the below transactions
(ii)Post the Journal entries into ledger accounts
| Date | Transactions |
| 2016 Oct 1 | Niel started business with cash $ 800,000 |
| Oct 2 | purchased goods worth $ 3000 |
| Oct 15 | Sold goods for $ 25000 |
| Oct 18 | Purchased stationeries $4000 |
| Oct 23 | Purchased furniture for $ 24,000 |
| Oct 25 | Paid electricity charges with cash $3000 |
| Oct 26 | Paid Salary $18000 |
| Oct 28 | Paid rent $500 |
(10 Marks)
- “Bookkeeping is synonymous to accounting”Analyse this statement.
(10 marks)
Question 2
- Prepare income statement and balance sheet of Indus Corp as on 31st Dec,2016.
| Particulars | Amount ($ ‘000) |
| Sales | 37,436 |
| Cash | 4,895 |
| Cost of goods sold | 26,980 |
| Accounts Payable | 7,156 |
| Accounts Receivable | 5,714 |
| Selling, general, and administrative expense | 3,624 |
| Inventories | 8,517 |
| Research and Development expense | 1,982 |
| Plant and Equipment | 7,154 |
| Interest expense | 450 |
| Long term liability | 20105 |
| Land | 981 |
| Income tax expense | 1,100 |
(10 Marks)
- Why are financial statements are so important for a business?
(10 Marks)
Question 3
- ABC Industries is in the Business of manufacturing agro equipment. Prepare the cash budget for the quarter April to June, based upon the following data and additional information.
| Month | Sales | Purchases | Wages | Selling Overheads | Office Overheads | Mfg. Overheads |
| $ | $ | $ | $ | $ | $ | |
| January | 60,000 | 36,000 | 9,000 | 4,000 | 2,000 | 4,000 |
| February | 62,000 | 38,000 | 8,000 | 5,000 | 1,500 | 3,000 |
| March | 64,000 | 33,000 | 10,000 | 4,500 | 2,500 | 4,500 |
| April | 58,000 | 35,000 | 8,500 | 3,500 | 2,000 | 3,500 |
| May | 56,000 | 39,000 | 9,000 | 4,500 | 1,000 | 4,000 |
| June | 60,000 | 34,000 | 8,000 | 4,500 | 1,500 | 3,000 |
Additional Information:
- The Cash balance at 1 April is $ 800000.
- Sales: 40% cash sales and 60% is collected in the month following sales.
- Purchases are all on credit and are paid after 2 months.
- A plot of land was purchased in December (Previous year) and $ 87,000 is payable in April.
- Wages are paid two month in arrear and all overheads are settled after a month they are incurred.
- ABC Industries is due to repay a loan of $ 16,000 in May.
- A dividend of $ 80,000 is expected to be received in May.
(10 Marks)
- “With zero-based budgeting,each expenditure item must be justified for the new budget period.” Explain.
(10 Marks
Question 4
A.(i) Moment Inc. provides the following data for June 2016 when 15,000 Units are manufactured:
Standard Material Cost (Per Unit)
8.50 kg @ $ 7.50/kg
Actual Material Cost (Per Unit)
6.75 kg @ $ 13.5/kg
StandardLabor cost (Per Unit)
5.5 hrs @ $ 15/hr
Actual Labor cost (Per Unit)
6.5 hrs @ $ 12.2/hr
Calculate:
Direct Material Price Variance
Direct Material Quantity/Usage Variance
Total Material Cost Variance
Direct Labor Rate Variance
Direct Labor Efficiency Variance
Total Labor Cost Variance
(ii) Calculate Variable Overhead Spending Variance if actual labor hours used are 260, standard variable overhead rate is $10.40 per direct labor hour and actual variable overhead rate is $9.30 per direct labor hour. Also specify whether the variance is favorable or unfavorable.
(iii) Calculate the variable overhead efficiency variance using the following figures:
| Number of Units Produced | 620 |
| Standard Direct Labor Hours Per Unit | 0.2 |
| Actual Direct Labor Hours Used | 260 |
| Standard Variable Overhead Rate | $10.40 |
- “Managers of most organizations continually plan for the future, and after the plan is implemented, managers assess whether they achieved their goals. What are the two functions that enable management to go through the process of continually planning and evaluating?
(20 Marks)
Question 5
- Robest Industries produces only one product. The following revenues and cost have been estimated for the forthcoming month:
Selling price, $ 250 per unit (SP)
Variable cost, $ 100 per unit (VC)
Fixed Cost, $ 56000
The managers of the firm wish to know the following:
- Calculate contribution margin per unit
- Calculate contribution margin ratio.
- BEP in units
- Calculate BEP in sales.
- “Good Managers must not only be able to understand the conceptual underpinnings of cost behaviour,but they must also be able to apply those concepts to real world data that do not always behave in the expected manner. “Explain cost behavior analysis.
(20 marks)
QUESTION 6
- Calculate (EOQ) using following information for APEX Inc.
- Annual demand 90,000 units
- Cost of placing order $ 30
- Cost of carrying 1 unit in inventory $9
- Calculate average inventory when safety stock is 2,000 units.
- “In the process of maintaining inventory records and physical count of goods on hand, error may occur. “Explain.
(20 marks)
