Accounting Answers

______ Evaluates the desirability of alternative outcomes based on one's value judgment about what Is good or what is bad

__________ It is concerned with analysis of fact and attempts to describe the world as it is 

_________It deals with conclusion about economic phenomenon from certain fundamental assumptions or truths or or axioms through a process of logical arguments

_______ is the process of deriving principal of theory by moving fact To theories from particular to general economic analysis

AA Entity and all its suppliers are registered VAT vendors. Where applicable, VAT is charged at 15%.

AA Entity sells crockery at a mark-up percentage of 25% gross profit on cost price. AA Entity is insured for potential inventory losses due to fire for an amount of R218 500 (including VAT).

On 21 July 2019, a fire broke out in the store room of AA Entity which destroyed almost all of AA Entity’s trade inventories, except for trade inventories with a cost price of R80 000 that the entity could salvage. This salvaged trade inventory items are still in a very good condition and will be sold at the normal selling price.

AA Entity uses the periodic inventory system and therefore does not know what the value of trade inventories on hand was on 21 July 2019. The last inventory count was performed at the reporting date on 30 June 2019 and the inventory records reflected trade inventories on hand at a cost price of R341 000 on that date.

The total value of supplier’s invoices for trade inventories purchased since the reporting date until the date of the fire, amounted to R59 280. The total value of sales invoices made out to customers since the reporting date until the date of the fire amounted to R159 600.

REQUIRED

1. Calculate the value of the insurance compensation that will probably be paid by the insurance company in respect of the trade inventories destroyed in the fire.

Mist (pty) Ltd is a company with a reporting period of 30 june. Currently the company's accountant is preparing the financial statements for the year ending 30 june 2019. Mist (pty) Ltd operates from a building it is leasing from a property developer. Mist (Pty) Ltd occupied the building on 1 july 2016 and pays monthly rental. The monthly rentals as from 1 july 2017 are R14 000 and there is an 10% annual increase .the lease agreement is for 4 years.

Question.

1. Provide necessary journal entries for the reporting of 30 june 2019.

b. Please compute cost per unit of each product on the new method of allocation

Writers' Company produces 2 products presently

The information related to manufacturing is given below.

WRITERS' Company

Yr 2018-19

Fountain Pen

Ball point

Units

10000

20000

Area occupied (sq feet)

7000

8000

Variable cost – Direct

32

25

Fixed Cost - Direct (per unit)

10

8

Rent - Fixed Cost per month (Indirect

- common for all products)

3,00,000.00