The following is a trial balance extracted from the books of David Coleiro, a manufacturer, as at 31 December 2017:<\/p>\n
Trial Balance as at 31 December 2017 N$ Capital 963,400 Bank 43,000 Sales 705,600 Purchases of Raw Materials 240,000 Carriage Inwards 5,000 Inventories: Raw Materials 50,000 Work in Progress 45,000 Finished Goods 80,000 Purchases Returns 2,000 Plant and Machinery, at cost 500,000 Allowance for Depreciation: Plant and Machinery 140,000 Motor Vehicles, at cost 80,000 Allowance for Depreciation: Motor Vehicles 30,000 Premises, at cost 390,000 Allowance for Depreciation: Premises 46,000 Direct Wages 150,000 Factory Indirect Wages 90,000 Power 16,000 Lighting and Heating 9,000 Insurance 3,000 Administration Salaries 160,000 Salesmen\u2019s Wages 95,000 Trade Receivables 35,000 Trade Payables 40,000 Drawings 22,000 1,970,000<\/p>\n
Additional information:<\/p>\n
(i) Inventories as at 31 December 2017 were valued as follows:<\/p>\n
Raw material $ 60, 450 Work in progress $ 38, 000 Finished goods $ 92, 000<\/p>\n
(ii) Lighting and heating is to be apportioned 2\/3 factory and 1\/3 administration.<\/p>\n
(iii) Insurance and depreciation on premises are to be share equally between the factory and administration.<\/p>\n
(iv) Insurance includes a prepayment of $ 500<\/p>\n
(v) $ 1 000 is owing for power while accrued lighting and hearting is $ 600.<\/p>\n
(vi) Depreciation is to be charged as follows: Premises 4% on cost Plant and machinery 20 % reducing balance method Motor vehicles 25% on book value<\/p>\n
Required: a) Prepare the Manufacturing Account for the year ended 31 December 2017 ( 20 marks) b) On 1 January 2017 the firm had an inventory of 100 units of finished goods on December 2017 was made up of 92 units were sold. Calculate the production cost of 1unit. ( 5 marks) [ Total : 25 Marks]<\/p>\n
ASSIGNMENT I BUSINESS ACCOUNTING BAC60US QUESTION 2 Otjituuo Domestic Entity (OD Entity), is a small highway construction company based in Benoni, Johannesburg. The business has been in operation for a number of years. OD Entity and all its suppliers are registered VAT sellers and VAT is calculated at 15%. The financial year end of OD Entity is 31 March.<\/p>\n
The following table reflects the property, plant and equipment information at 1 April 2016.<\/p>\n
N$ N$ N$ N$<\/p>\n
Building Equipment Furniture Plant Cost ? 5 300 000 3 450 000 2 000 000 Accumulated depreciation ? (2 500 000) (2 415 000) (1 480 000) Carrying value ? 2 800 000 1 035 000 520 000<\/p>\n
The following additional information is available:<\/p>\n
Building The building was constructed at a cost of N$ 5 000 000. The accounting policy of the entity is to depreciate the building on a straight line basis over a period of 25 years. The building was built next to a sensitive wetland and one of the conditions in the permit to build, was that sections close to the wetland would have to be rehabilitated after 25 years. It is reliably estimated that the present value of these rehabilitation costs would be N$ 570 000 excluding VAT. The rehabilitation costs meet the definition and recognition criteria of a liability. The residual value is estimated at N$ 1 500 000. The building was available and ready for use on 1 July 2012.
\nEquipment Excavation equipment is depreciated on a straight line basis over an estimated useful life of 8 years with a residual value of N$ 300 000. On 31 March 2017, the construction manager, after reviewing the condition of the equipment, indicated that the total useful life of the equipment should be revised to 10 years with the residual value remaining unchanged.
\nASSIGNMENT I BUSINESS ACCOUNTING BAC60US 3. Furniture Furniture is also depreciated on a straight line basis over 10 years with no residual value. As a result of its recent poor condition, an expert was called in to evaluate the furniture. Her professional opinion is that the furniture is not the quality that was originally anticipated and has estimated that the recoverable amount of the furniture is N$ 510 000 on 31 March 2017.<\/p>\n
Plant
\nThe plant is used for crushing rocks removed from the civil sites. It is depreciated on a units of production method based on the number of tons of rocks crushed and has no residual value. Plant similar to the one owned by OD Entity are expected to crush 1 million tons of rocks over their useful lives. With advances in technology, it was established that a more fuel efficient and reliable model is on the market. RC Entity decided to trade-in the existing plant for a new plant on 1 October 2016 from PM Entity. Up to 30 September 2016, the existing plant had crushed 890 000 tons of rocks since it was brought into operation.<\/p>\n
The new plant cost N$ 2 508 000 (VAT included) and PM Entity agreed to give OD Entity a VAT-inclusive trade-in credit of N$ 342 000 and the balance would be financed by the supplier\u2019s loan facility.<\/p>\n
The new plant is expected to crush 1,8 million tons of rocks over its useful life, and it has crushed 120 000 tons up to 31 March 2017.<\/p>\n
Required:<\/p>\n
a) Provide ALL journal entries relating to the plant for the period ended 31 March 2017. \u2013 Journal narrations are not required. \u2013 The effect on the accounting equation (A = E + L) is not required. \u2013 The effect of journal entries on Profit & Loss (P&L), Statement of changes in Equity (SCE) and Statement of Financial Position (SFP) must be shown in brackets. (Total Marks 19)
\nb) Disclose the Property, Plant and Equipment note to the financial statements of OD Entity for the reporting period ended 31 March 2017.
\n\u2013 When preparing the note, record the assets in the separate columns namely, Building, Equipment, Furniture and Plant. \u2013 The Total column of the note is not required. \u2013 Accounting policy notes are not required. \u2013 Show all calculations and reference clearly. \u2013 Round off to the nearest Dollar amount where applicable. (Total Marks26)<\/p>\n
ASSIGNMENT I BUSINESS ACCOUNTING BAC60US Question 3 Clever Computers CC is owned by a young lady, Cheryl Cee. The organisation sells laptops and its main market is young professionals. The organisation purchases the computer from a wholesaler in Windhoek, Computer Connection (Pty) Ltd, which is a VAT registered vendor. Clever Computers CC is a non-registered vendor. The price of one laptop bought from its supplier (Computer Connection (Pty) Ltd) amounts to N$ 3 450 (VAT inclusive).<\/p>\n
Cheryl has informed you that she travels a lot and needs to know at all times how many laptops are held by the business. The laptops are sold by Clever Computers CC at a mark-up of 35 %. The accountant of Clever Computers CC had the following information regarding the financial year ending 30 June 2015: Opening inventory: 60 Computers Laptops bought: 250 Laptops sold: 280 Except for the above, Clever Computers CC also donated 4 laptops to the top achievers in Financial Accounting 101 at the Polytechnic of Namibia. After the financial year-end Apple Computers established a branch in Windhoek and Clever Computers CC will have no option but to sell their laptops at N$ 2 800 each, in order to keep up with the competitive market. Assume VAT at 15 %. REQUIRED:<\/p>\n
a) Explain to Cheryl what the differences are between the two inventory systems and advise her which system would be more appropriate for her business. (6 Marks)
\nb) Calculate the selling price per computer. What will your answer be if the profit margin was 20 %? (4 Marks) c) Calculate the value of closing inventory laptops on hand on 30 June 2015 and explain to Cheryl the reason(s) for using the value per item that you used in your closing balance calculation. (6 Marks)
\nd) Provide the journal entries if Clever Computers CC lost two computers due to theft. The journals for each of the inventory systems as per (a) above must be provided. (4 Marks) [Total 20 Marks] ASSIGNMENT I BUSINESS ACCOUNTING BAC60US
\nQuestion 4 Discuss accounting theory and current cost accounting<\/p>\n","protected":false},"excerpt":{"rendered":"
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