Answer for Exam Five

Project One
Given
A. Bishoftu Ababa Exhibition Center
Fixed Costs = 4,000
Variable Costs = 160
B. Tommy Hotel Hall
Fixed Costs = 12,000
Variable Costs = 90
Selling Price is 240 for both, Administrative cost is 7,000 and Band budget is 5,000
Solution
A. Bishoftu Ababa Exhibition Center B. Tommy Hotel Hall
Total Budget = 7,000 + 5,000 = 12,000 Total Budget = 7,000 + 5,000 = 12,000
FC = 4,000 + 12,000 = 16,000 FC = 12,000 + 12,000 = 24,000
VC = 160/unit VC = 90/unit
SP = 240/unit SP = 240/unit
SP – VC – FC = 0 SP – VC – FC = 0
240Q – 160Q – 16,000 = 0 240Q – 90Q – 24,000 = 0
80Q = 16,000 150Q = 24,000
Q = 16,000/80 = 200 tickets Q = 24,000/150 = 160 tickets
If 300 customer attended
A. Bishoftu Ababa Exhibition Center B. Tommy Hotel Hall
SP*Q – VC*Q – FC SP*Q – VC*Q – FC
= (240*300) – (160*300) – 16,000 = (240*300) – (90*300) – 24,000
= 72,000 – 48,000 – 16,000 = 8,000 = 72,000 – 27,000 – 24,000 = 21,000

Project Two
1. Adjusting Entries
a. Supplies Expense ------890
Supplies -----------------890
(1,270 – 380)
b. Insurance Expense -----315
Prepaid Insurance ---------315
c. Depreciation Expense ----4,950
Accumulated Depreciation ------4,950
d. Wages Expense -------440
Wages Payable -----------440
e. Accounts Receivable ------1,000
Fees earned ---------------1,000
f. Unearned Fees --------500
Fees Earned ---------------500
(1,250 – 750)
GELETA PLC
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 Adjusted Trial Balance
For the month of June 30, 2010

Account Title Debit Credit

Cash 3,425
Fees Receivable 8,000
Supplies 380
Prepaid Insurance 305
Office Equipment 51,650
Accumulated Deprecation 14,650
Account Payable 925
Wages Payable 440
Unearned fees 750
Geleta, Capital 29,000
Geleta, Drawing 5,200
Fees Earned 60,625
Wages Expense 22,855
Rent Expense 4,200
Utilities Expense 2,715
Depreciation Expense 4,950
Supplies Expense 890
Insurance Expense 315
Miscellanies Expense 1,505
Total 106,390 106,390

Huluka Company
Income Statement
For the Year Ended June 30, 2010
Revenues:
Fees Earned ---------------------------------------------------------------------------------- 60,625
Expenses:
Wages Expense --------------------------------------------- 22,855
Depreciation Expense --------------------------------------- 4,950
Rent Expense ------------------------------------------------- 4,200
Utilities Expense --------------------------------------------- 2,715
Supplies Expense ---------------------------------------------- 890
Insurance Expense --------------------------------------------- 315
Miscellaneous Expense --------------------------------------- 1,505
Total Expense ---------------------------------------------------------------------------------- 37,430
Net Income -------------------------------------------------------------------------------------- 23,195
Huluka Company

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 Statement of Owner’s Equity
For the Year Ended June 30, 2010
Beginning Capital --------------------------------------------------------------- 29,000
Net Income -----------------------------------23,195
Less: Drawing ------------------------------- 5,200
Increase in Owner’s Equity --------------------------------------------------- 17,995
Ending Capital ------------------------------------------------------------------ 46,995

Huluka Company
Balance Sheet
For the Year Ended June 30, 2010
Assets
Cash ------------------------------------ 3,425
Accounts Receivable ----------------- 8,000
Supplies -------------------------------- 380
Prepaid Insurance ------------------ 305
Equipment -----------51,650
Less: Acc. Depn -----14,650 37,000
Total Assets ------------------------- 49,110

Liabilities
Accounts Payable ------------------- 925
Wages Payable ---------------------- 440
Unearned Fees ----------------------- 750
Total Liabilities -----------------------------2,115
Owner’s Equity
Capital -------------------------------------- 46,995
Total Liabilities ---------------------------- 49,110

Closing Entries
i. Fees Earned -------------------60,625
Income Summary ----------------60,625

ii. Income Summary ------------ 37,430

Wages Expense ---------------------- 22,855
Depreciation Expense --------------4,950
Rent Expense ------------------------ 4,200
Utilities Expense --------------------- 2,715
Supplies Expense --------------------- 890
Insurance Expense -------------------- 315
Miscellaneous Expense -------------- 1,505
iii. Income Summary ---------- 23,195
Capital ------------------------------ 23,195
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 iv. Capital --------------------- 5,200
Drawing ------------------------- 5,200

GELETA PLC
Post-Closing Trial Balance
For the month of June 30, 2010

Account Title Debit Credit

Cash 3,425
Fees Receivable 8,000
Supplies 380
Prepaid Insurance 305
Office Equipment 51,650
Accumulated Deprecation 14,650
Account Payable 925
Wages Payable 440
Unearned fees 750
Geleta, Capital 46,995
Total 63,760 63,760

Project Three

a. At a Point of Sale Method

Installment Sales ---------------------------------------------- 600,000
Cost of Merchandise Sold ------------------------------------ 360,000
Gross Profit ----------------------------------------------------- 240,000
b. Installment Method
= Gross Profit = 120,000 = 40%
Installment Sales 300,000

1st Year Collection = 280,000* 40% = 112,000

2nd Year Collection = 200,000* 40% = 80,000
3rd Year Collection = 120,000 * 40% = 48,000
Total 600,000 240,000

Project Four

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 Date Unit Unit Cost Total Cost

July 1: Inventory ----------------- 300 8 = 2,400

July 15: Purchase ---------------- 350 11 = 3,850

July 20: Purchase ---------------- 450 12 = 5,400

July 28: Purchase ---------------- 550 13 = 7,150

Total 1,650 18,800

Periodic FIFO

Most Recent, July 28 -------------- 550 * 13 = 7,150

Next Most Recent, July 20 --------- 80 * 12 = 960
Total 630 8,110

Cost of Goods Sold = CMAFS – Cost of Ending Inventory

= 18,800 – 8,110 = 10,690

Gross Profit = Net Sales – Cost of Goods Sold

= 1,020 * 20 = 20,400
Gross Profit = 20,400 – 10,690
= 9,710
Gross Profit -----------------------------------------------------------9,710
Less: General Expenses( 2,500 – 900) --------------------------- 1,400
Income Before Tax -------------------------------------------------- 8,310
Less: Business Profit Tax (30%*8,310) -------------------------- 2,493
Net Income ------------------------------------------------------------ 5,817

Project Five: Payroll

S. Name BS Allowance OT GE EIT PC CA TD NP Si

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N g
Rep Fuel
1 Dawit K. 5,500 750 4,000 - 10,250 2,312.5 330 550 3,192.5 7,057.5
2 Abebe A. 3,500 350 3,000 262.5 7,112.5 1,354.38 210 350 1,914.38 5,198.12
3 Chalyu T. 850 - - 79.69 929.69 91.95 - - 91.95 837.74
4 Meseret L. 2,800 150 2,000 262.5 5,212.5 806.25 168 280 1,254.25 3,958.25
5 Selam B. 1,500 - 1,000 140.63 2,640.63 210.63 90 75 375.63 2,265
Total 14,150 1,250 10,000 745.32 26,145.32 4,775.71 798 1,255 6,828.71 19,316.61

Journal Entries
1. To record the salary expense for the period
Salary expense…………………… 26,145.32
Income Tax Payable……………………… 4,775.71
Pension Payable………………………….. 798
Credit Association Payable ……………… 1,255
Cash………………………………………. 19,316.61

2. To record the payroll tax payable (employer pension expense)

Payroll Tax Expense ……… 1,691.69
Pension Contribution payable………. 1,691.69
(13,300* 8% = 1,064)

3. To record the credit association payable

Credit Association Payable ……… 1,255
Cash………………………………… 1,255
4. To record the payment of payroll tax and withholding payments
Income tax payable ………………… 4,775.71
Pension payables………………………2,489.69
Cash……………………………………… 7,265.40

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