No. 5(a): Preparation of manufacturing Account for Kaycee Garments for the year ended 31st December 2017: I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to make your comments below. Good Luck!
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No. 4(a): Workings for preparation of the appropriation account of Benji and Nicka:
Calculation of interest on capital:
Calculation of interest on drawings:
Calculation of share of profit using ratio of 3:2: Remaining profits = (56,200 + 300 + 215) – (16,000 +14,000 + 5,000) = $21,715
We hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to make your comments below. Good Luck!
No. 2(a) (i): Formulae and comments on the gross profit margin and the operating expenses/sales revenue ratios:
Gross Profit Margin: The formula to compute gross profit margin is; Gross profit x 100 Sales The gross profit margin for the year ended 31st December 2017 was 24%. This means that for every $1 of sales revenue earned the business had $0.24 to help cover the expenses for that period. This is a 4% increase when compared to the gross profit margin of 2016 and thus a strength, or a positive thing for the business. Operating Expenses/Sales Revenue: The formula to compute operating expenses/sales revenue is; Operating Expenses x 100 Sales Revenue The operating expenses/sales revenue for the year ended 31st December 2017 was 11%. This means that for every $1 of sales revenue earned the business paid $0.11 towards expenses for that period. This is a 2% increase opposed to the $0.09 they paid in 2016. This may be perceived as a negative thing as it means that the expenses of the business increased during 2017. Please note however, that there may be a number of reasons for this such as increased sales resulting in increased expenses, and therefore may not necessarily be a sign of weakness. No. 1(a): Preparation of Cash Book for the month of 31st March 2018. Workings: 1. 26th March 2018 the total of the cheque to Jeff’s AirCon: Cheque will equal $7,500 less a 5% discount. The discount equals 5% x $7500 = $375. Therefore the cheque total equals = $7,500  $375 = $7,125. 2. 30th March 2018 the total of the cheque received from Layby Stores: Invoice total on the 13th March sent to Layby Stores equals $2,250 less 20% trade discount. The discount equals 20% x $2,250 = $450. Therefore the invoice total equals = $1,800. 19th March 2018 the total of the credit note sent to Layby Stores equals $200 less 20% trade discount. The discount equals 20% x $200 = $40. Therefore the credit note total equals $200  $40 = $160. This means that the total on Layby Store’s account on the 30th March 2018 = $1800  $160 = $1640. Layby Stores was given a cash discount of $150 therefore the cheque received from Layby will equal $1640  $150 = $1,490. Now that the workings has been completed the Cash Book for the month ended 31st March, 2018 can be prepared.

AuthorThe author holds a Bsc (Hons) Degree in Applied Accounting from Oxford Brookes University, England and enjoys a successful career as an Accounting Supervisor and a private tutor. Archives
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