Accounting Answers

1.   Gore Company makes products for sporting events. The following data are for the year ended December 31:

Materials inventory, January 1…………………………….    $ 45,000

Materials inventory, December 31………………..……          65,000

Materials purchases………………………………………….….175,000

Direct labor…………………………………………………         225,000

Work in process inventory, January 1………………....         30,000

Work in process inventory, December 31……………...         40,000

Manufacturing overhead…………………………………         130,000

Finished goods inventory, January 1…………………..         80,000

Finished goods inventory, December 31……………..…..      140,000

Prepare a Cost of Goods Manufactured Statement and compute the cost of goods sold.

The Mixing Department of Crown Cement has the following cost and production data for

the month of June. [10]

Costs:

Work in process, June 1

Direct materials: 100% complete

Conversion costs: 20% Complete

$90,000

60,000

Cost of work in process, June 1 150,000

Costs incurred during production in June

Direct materials

Conversion costs

$600,000

280,000

Costs incurred in April 880,000

Units transferred put totaled 15,000. Ending work in process was 1200that are 100%

complete as to material and 40% complete as to conversion costs.

Instructions

a. Compute the equivalent units of production for (1) materials and (2)

conversion costs for the month of June. [4]

b. Compute the unit costs for the month. [3]

c. Determine the costs to be assigned to the units transferred out and in ending

work in process.

The budgeted and standard data for productivity include the following

Direct labour

Ten employees work for 45 hour a week. The standard rate of pay is ksh 4 per hour. Output per hour is 40 kg of the product.

Direct material

Material quantity kg price per kg

X 60 2.00

Y 40 1.00

Z 100 1.40

From this standard matrix 180 kg of product is expected

Actual data for first week in April were as follows

Hours worked 45

Rate of pay ksh 4 per hour

Overhead incurred ksh 5400

Output 1980 kg

Production and consumption of materials were as follows:

Material Quantity (kg)

X 700

Y 440

Z 1120

Required

Calculate the following direct material variance for each material (10mks)

Total

Price

Usage

mix

Calculate the direct labor efficiency variance (10mks)

1 Oct1, 2020 Business owner Samuel Smith input $5000 cash and $3000 office equipment into the business 2 Oct5, 2020 Business paid 6 month insurance for $3,000, paid in cash 3 Oct7, 2020 Business received the customer money $6,300 for the services to be perform in the near future 4 Oct10, 2020 Business bought $2,100 office supplies on credit 5 Oct13, 2020 Business bill the customer $3,000 for the services completed 6 Oct15, 2020 Business found the defective office supplies $300 from the Oct10 purchase, returned them back to supplier 7 Oct16, 2020 Business provided the services for Transaction#3 8 Oct20, 2020 Business paid the owing amount from Transaction#4 9 Oct25, 2020 Business received $1000 from the Oct13, 2020 service provided. 10 Oct29, 2020 Business paid employee $3,500 salary. 11 Oct30, 2020 Business received Oct, 2020 telephone bill $320, it will be paid in November 12 Oct31, 2020 Business owner withdrew $1200 cash from the business bank account.

Question 2

The budgeted and standard data for productivity include the following

Direct labour

Ten employees work for 45 hour a week. The standard rate of pay is ksh 4 per hour. Output per hour is 40 kg of the product.

Direct material

Material quantity kg price per kg

X 60 2.00

Y 40 1.00

Z 100 1.40

From this standard matrix 180 kg of product is expected

Actual data for first week in April were as follows

Hours worked 45

Rate of pay ksh 4 per hour

Overhead incurred ksh 5400

Output 1980 kg

Production and consumption of materials were as follows:

Material Quantity (kg)

X 700

Y 440

Z 1120

Required

(a) Calculate the following direct material variance for each material (10mks)

i. Total

ii. Price

iii. Usage

iv. mix

(b) Calculate the direct labor efficiency variance (10mks)

KEY insurance agency was organized on october 1,2020. assume that the accounts are closed and financial statements each month.the company occupies rented office space but owns office equipment estimated to have a useful life of 10 years from date of acquisition,october 1.the trial balance for key insurance agency at eecember 31 is shown below.

Question 6 (13 marks)  As the result of an audit, IMF Productions Ltd received an amended assessment on 1 June 2022 for the year ended 30 June 2021. It amended an earlier assessment, which was dated 11 December 2021, by disallowing $110,000 claim for work related travel expenses. The travel expenses were incurred in establishing an office in China. IMF Productions Ltd already has a number of offshore offices in the Asia-pacific region. Required: (a) Advise IMF Productions Ltd about objecting to the amended assessment citing relevant legislation to support your answer.                                                                  (6 marks) (b) Assuming that, on the 1 October 2022, IMF Productions Ltd received notice that their objection had been disallowed, what further options are available to them? What are some of the factors that should be considered? Cite relevant legislation to support your answer.  

1.     On January 3, 2003, Ale Hab, an ex-manager of the CBE Bole Branch, established his own consultancy business. He named his business "AH Consultancy Services". The objective of the business is to render financial consultancy services to clients on a fee basis. Below are business activities occurred during the first month of operation of the firm (3 to 31 of January, 2003).

a.      Alemu deposited $20,000 cash in a bank account in the name of his business - AH Consultancy Services (Deposit slip # 1). He has $250,000 cash in his personal bank account with Dashen Bank and $50,000 cash in a safe deposit box at home.

1. The management of XYZ Company provides you with comparative balance sheets of the years ended December 31, 2012 and 2011. Management asks you to prepare a horizontal analysis on the information.

As indicated in table above sales increased by 8.3% while net income decreased by 21.9%. You identified that there were increases in both cost of goods sold (14.3%) and operating expenses (2.1%). These increased costs more than offset the increase in sales, yielding an overall decrease in net income. You already identified the Couse of the problem. Therefore, what are the possible actions should be taken to eliminate the reduction of the net income?