Accounting Skills: Hasbeen Company
a). Hasbeen Company completed its inventory count. It arrived at a total inventory value of $200,000. You have been given the information listed below. Discuss how this information affects the reported cost of inventory.
i). Hasbeen included in the inventory goods held on consignment for Falls Co., costing $15,000.
ii). The company did not include in the count purchased goods of $10,000, which were in transit (terms: FOB shipping point).
iii). The company did not include in the count inventory that had been sold with a cost of $12,000, which was in transit (terms: FOB shipping point).
b). Tracy Company sells three different types of home heating stoves (gas, wood, and pellet). The cost and net realizable value of its inventory of stoves are as follows.
|Cost($)||Net Realizable Value ($)|
Determine the value of the company’s inventory under the lower-of-cost-or-net realizable value approach. (10 Marks)
Q2. Prepare a Trial balance for the below data: (10 Marks)
a). Variance analysis involves the measurement of the deviation of actual performance from the intended performances. There can be many reasons for an adverse or favorable variances. On this base, calculate the Material Cost Variance (MCV) from the following and comment.
|Material usage per unit (kgs)||2||2.2|
|Price per kg($)||14||15|
|Actual units produced||100|
b). On 1st April, 2011, a merchant purchased a furniture costing $ 55,000. It is estimated that its life is 10 years at the end of which it will be sold for $5,000. Additions are made 1st April, 2012 and 1st October, 2014 to the value of $9,500 and $8,400 (Residual values $500 and $400 respectively). Calculate Depreciation according to the Straight Line Method. (10 Marks)Q4. Presented below is selected information related to Alaska Company at December 31, 2017. Alaska reports financial information monthly.
Equipment $10,000 Utilities Expense $ 4,000
Cash 8,000 Accounts Receivable 9,000
Service Revenue 36,000 Salaries Expense 7,000
Rent Expense 11,000 Notes Payable 16,500
Accounts Payable 2,000 Owner’s Drawings 5,000
(a) Determine the total assets of the company as on March 31, 2017.
(b) Determine the net income reported for March 2017.
(c) Determine the owner’s equity at March 31, 2017.
Q5. Data for Houston Electronics’ Astro condensers. Calculate the value for Cost of goods sold and Ending inventory according FIFO, LIFO and Average Cost methods. (20 Marks)Q6. How many ice-creams, having a variable cost of $3 and selling price of $12, must a vendor sell in order to recover fixed costs of $63000? Calculate BEP in units and amount.
a). Calculate the number of units the vendor needs to sell in order to earn the target profit of $18000.
b). Calculate the minimum volume of sales required to maintain the current profit, under the given two scenarios:
- If the selling prices is raised from $12 to $13,
- If the fixed cost fall by $5000 but the variable costs rise to $4 per unit, calculate the minimum volume of sales required to maintain the current profit.
c) Calculate Margin of safety in units and percentage terms, if the vendor could manage to sell 10000 units. (20 Marks)
Q7. Transactions made by Jill Jones and her family, a lawn care services, for the month of May are shown below. Prepare a tabular analysis which shows the effects of these transactions on the expanded accounting equation.
- On May 1, Jill Jones and her family invested $8,000 in JJ’s Lawn Care Service and received 800 shares of stock.
- On May 2, JJ’s purchased a riding lawn mower for $2,500 cash.
- On May 8, JJ’s purchased a $15,000 truck. JJ’s paid $2,000 down in cash and issued a note payable for the remaining $13,000.
- On May 11, JJ’s purchased some repair parts for $300 on account.
- Jill realized she had purchased more repair parts than needed.
- On May 18, JJ’s was able to sell half of the repair parts to ABC Lawns for $150, its equal to JJ’s cost. It will be paid the cash within 30 days.
- On May 25, ABC Lawns pays JJ’s $75 as a partial settlement of its accounts receivable.
- On May 28, JJ’s pays $150 of its accounts payable.
- On May 29, JJ’s recorded lawn care services provided during May of $750. All clients were paid in cash.
- On May 31, JJ’s purchased gasoline for the lawn mower and the truck for $50 cash.