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Individual Assignment (Assosa) MBA

This document contains 9 questions related to accounting concepts such as inventory cost flow assumptions, petty cash, bank reconciliation, contingencies, warranty accounting, loans, cost-volume-profit analysis, and cash flow statements. The questions require calculating costs of goods sold and ending inventory under different inventory methods, journal entries for petty cash and bank reconciliation, accounting for tax disputes and product warranties, amortization schedules for loans, determining profit/loss given costs and sales, and preparing a cash flow statement.

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42 views3 pages

Individual Assignment (Assosa) MBA

This document contains 9 questions related to accounting concepts such as inventory cost flow assumptions, petty cash, bank reconciliation, contingencies, warranty accounting, loans, cost-volume-profit analysis, and cash flow statements. The questions require calculating costs of goods sold and ending inventory under different inventory methods, journal entries for petty cash and bank reconciliation, accounting for tax disputes and product warranties, amortization schedules for loans, determining profit/loss given costs and sales, and preparing a cash flow statement.

Uploaded by

aterefemelaku29
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
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Assosa University, Department of Accounting and Finance

Financial and managerial Accounting for MBA (weekend) students


Individual assignments II (25 pts)
Instruction: Answer each of the following questions by showing all necessary steps and
provide your justification if necessary
Date of submission 2 day before final exam.

1. Suppose XY Company has the following transactions for July 2013: Operating expense for
July was $1,900. The firm uses periodic inventory system (5 pts)

Date Item Quantity Unit cost Sale price


Jul 1 Beginning inventory 100units $9
10 Purchase 60units 10
15 Sale 70units $21
21 Purchase 100units 11
30 sale 90units 26
Required:
1. Calcualte the cost of goods sold, ending inventory, gross profit and
operating income uner FIFO, LIFO, and Average cost.

2. Comparing Cost of goods sold under FIFO, LIFO, and average cost. Use the data in Q-2 above
to answer the following questions (5 pts)
Required:
1. Which method of inventory accounting produced the lowest cost of goods sold?
2. Which method of inventory accounting produced the highest cost of goods sold?
3. Which cost flow assumption is advantageous for the firm for tax purpose?
4. If prices had been declining instead of rising, which inventory method would have
produced the highest cost of goods sold?

3. Petty cash

The following petty cash transactions of Grayson Gaming Supplies occurred in March:
9
8
Mar 1, Established a petty cash fund with a $1500 balance.
The petty cash fund has $40 in cash and $1480 in petty cash
Tickets that were issued to pay for Office supplies ($580) and
Entertainment expense ($900).

Required:
a. Prepare journal entries to establish petty cash fund.
b. Prepare journal entries to replenish petty cash fund.

4. Preparing a bank reconciliation and journal entries (5 pts)

1
The August 31 bank statement of Winchester’s Healthcare has just arrived from United
Bank. To prepare the bank reconciliation, you gather the following data:

a. The August 31 bank balance is $4,870.


b. The bank statement includes two charges for NSF checks from customers. One is for
$400 (#1), and the other for $110 (#2).
c. The following Winchester checks are outstanding at August

Check No. Amount


237 $ 50
288 170
291 520
294 580
295 50
296 140
d. Winchester collects from a few customers by EFT. The August bank statement lists a
$1,300 EFT deposit for a collection on account.
e. The bank statement includes two special deposits that Winchester hasn’t recorded yet:
$970, for dividend revenue, and $80, the interest revenue Winchester earned on its
bank balance during August.
f. The bank statement lists a $30 subtraction for the bank service charge.
g. On August 31, the Winchester treasurer deposited $350, but this deposit does not
appear on the bank statement.
h. The bank statement includes a $1,000 deduction for a check drawn by Multi-State
Freight Company. Winchester notified the bank of this bank error.
i. Winchester’s Cash account shows a balance of $2,900 on August 31.

Required:
1. Prepare the bank reconciliation for Winchester’s Healthcare at August 31, 2012.
2. Journalize any required entries from the bank reconciliation. Include an explanation
for each entry.
5. Assume that during 2013, ABC company became involved in a tax dispute with the Tax
authority of the country. ABC’s attorneys have indicated that they believe it is probable that
ABC will lose this dispute. They also believe that the company will have to pay the tax
authority between $900,000 and $1,400,000. After the 2013 financial statements were issued,
the case was settled with the tax authority for $1,200,000.
Required: What amount, if any, should be reported as a liability for this contingency as of
December 31, 2013?
6. Assume that in 2013, ABC Company sold 20,000 units of product X at a unit selling price of
$150 with a one-year warranty. The warranty expense was estimated at 5% per unit. During
the year, the company had paid $80,000 worth of warranty expense.

2
a. The journal entries to record warranty related transaction would at 2013?
b. Warranty costs for 2014 and its necessary journal entry?

7. A man would like to borrow money from BG microfinance institution which charges interest
at 4% compounded quarterly .if the man is able to pay Br 100 at the end of each quarter for
one year
a, How much should receive from the institution at the time of borrowing ?

b, how much interest will the man be charged ?

c, prepare the amortization schedule?

8. A manufacturer has a fixed cost of Br 80,000 and variable cost of Br 4 per unit made and sold
at price of Br 5 per unit .W hat is the value of profit (loss) if 25,000units are made and sold?
9. The company sustained a net loss for the year of $50,000. Depreciation amounted to $22,000,
and a gain of $9,000 was realized on the sale of land for $39,000 cash.
a. What kind of cash flow you expect from this transaction?
b. Prepare the cash flow statement for you choice?

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