No. 1(a): Preparation of VIP Enterprises’ Income Statement for the year ended 30th November 2011: No. 1(b): Preparation of VIP Enterprises’ Statement of Financial Position as at 30th November 2011: No. 1(c) Calculation of Stock Turnover and Return on Capital Employed (ROCE) ratios: I hope that you found this proposed solution helpful! If you did please share it! Also, feel free to ask any questions or to comment below. Best of luck!
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Workings for the preparation of the Profit and Loss Account of Alvin Preston for the year ended 31st December, 2007: Note 1: The bad debt of $250 must be written off using the following double entry: Dr Bad Debt Expense a/c Cr Debtors a/c With $250 to write of the bad debt. Note 2: The provision for would be increased from $300 to $400 by passing the following double entry: Dr Profit & Loss a/c Cr Provision for bad debt a/c With $100 to increase the provision for bad debt from $300 to $400. Note 3: The double entry to record the cheque payment of $200 made by the debtor that has not been accounted is: Dr Bank a/c Cr Debtors a/c With $200 to record the cheque payment of $200. Below is the updated debtor’s account for Alvin Preston based on the details of notes one (1) and three (3). Please note students were not required to prepare this account for the May 2008 examination. The updated account has been presented to illustrate how the notes affected the debtors’ balance. Note 4: The insurance expense of $150 that is owed by Preston is an accrual that will appear on the Profit and Loss Account as an expense and on the Balance Sheet under Current Liabilities. Note 5: The current balance on the rate account must be adjusted for the prepayment of $50. The rates expense for the Profit and Loss will therefore be $750 - $50 = $700 and the prepayment of $50 will be listed on the Balance Sheet under Current Assets. Note 6: Calculation of depreciation on motor vehicles using the reducing balance method: 30% ($12,500 - $7,500) = $1,500 per annum. The depreciation expense for the year ended 31st December 2007 that would appear in the Profit and Loss Account is $1,500 and the accumulated depreciation figure for the Balance Sheet would be ($7,500 + $1,500) = $9,000. Now that all of the workings have been completed the Profit and Loss Account for Alvin Preston can be prepared. No. 1(a): Preparation of the Profit and Loss Account of Alvin Preston for the year ended 31st December, 2007. No. 1(b): Preparation of the Balance Sheet of Alvin Preston as at 31st December, 2007. 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!
No. 5(a): Preparation of manufacturing Account for Kaycee Garments for the year ended 31st December 2017: No. 5(b): Calculation of the cost of production per unit based on Kaycee Garments production of 40,000 uniforms for the year: Cost of production per unit = Total cost of production = 553,350 = $13.83/unit Number of units produced 40,000 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!
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
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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 Air-Con: 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.
No. 7(a): One item of revenue and one item of capital expenditure: Revenue expenditure – The payment of rent expenses Capital expenditure – The purchase of the packaging machine. No. 7(b): Below are the 'T-accounts’ requested opened in the appropriate ledgers: 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!
No. 6(a) (i): The fixed assets of Sautec Credit Union are:
No. 6(a) (ii): The current liabilities of Sautec Credit Union are:
No. 6(a) (iii): Below is the Balance Sheet Extract of Sautec Credit Union showing the capital section as at 1st January 2013:
No. 5(a) (i): The gross pay for Mark is calculated as follows: Mark’s gross pay = 27 hours x $30 = $810. No. 5(a) (ii): The gross pay for John is calculated as follows: John’s gross pay = 40 hours x $30 = $1,200 (basic hours) = 6 hours x 1.5($30) = $270 (overtime hours) Total gross pay for John = $1,200 + $270 = $1,470. No. 5(b): Below is the completed payroll form for Mark and John using the format specified: No. 5(c): One difference between ‘statutory deductions’ and ‘voluntary deductions’ is: Statutory deductions are mandated by law therefore an employer is obligated to deduct it from an employee’s salary. Voluntary deductions on the other hand are not mandated by law and is usually based on the request or approval of an employee. 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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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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