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2. SSS Enterprises hired Joseph Ramos as an Accounting Clerk. He accepted a monthly basic pay of P18,000. For the first six months, it was a company policy that he will be under probationary employment status and as such will be paid on a daily basis. No work, no pay applies to him.
Assuming that the company observes a 262 working days per year and Joseph works for 22 days for the month of January 2020 with 18 hours of overtime pay. Compute his salary for the month, net of mandatory deductions.
PROBLEMS:
1. The following persons are under the employment of A & B Enterprises:
Employees Monthly Salary Overtime Work
June Matic P 8,000.00 Reg. Holidays – 8 hrs.
Henry Flores 10,000.00 Rest Day – 10 hrs.
Maria Sarmiento 15,000.00 Reg. Day – 10 hrs.
A & B Enterprises is paying its employees on a semi-monthly basis. The membership fees are deducted on the first half of the month payroll, and the withholding tax is deducted on the second half of the month payroll. The employees did not incur any tardiness and absences during the month. They are entitled to overtime pay. The enterprise is using the 314 working days in a year as basis with 8 regular working hours in a day.
Requirements:
1. Compute the withholding faxes of each employee.
2. Compute the overtime pay of each employee.
3. Prepare the payroll sheet for the period March 1 – 15, 2020.
J. Wright, a sole trader, extracted the following trial balance from his books at the close
of business on 31 March 2016:-
Purchases and sales 61,420 127,245
Inventory 1 April 2015 7,940
Capital 1 April 2015 25,200
Bank overdraft 2,490
Cash 140
Discounts 2,480 62
Returns inwards 3,486
Returns outwards 1,356
Carriage outwards 3,210
Rent and insurance 8,870
Allowance for doubtful debts 630
Fixtures and fittings 1,900
Van 5,600
Accounts receivable and accounts payable 12,418 11,400
Drawings 21,400
Wages and salaries 39,200
General office expenses 319
168,383 168,383
Notes:
(a) Inventory 31 March 2016 £6,805.
(b) Wages and salaries accrued at 31 March 2016 £3,500; Office expenses owing £16.
(c) Rent prepaid 31 March 2016 £600.
{d) Increase the allowance for doubtful debts by £110 to £740.
(e) Provide for depreciation as follows: Fixtures and fittings £190; Van £1,400.
Prepare the statement of profit or loss for the year ending 31 March 2016 together with a statement
of financial position as at that date.
Explain the effects of the following transactions on cash and how they would be shown in the statement of cash flow
1)the purchase of equipment for $2million with cash proceeds from the issue of a 12 month note payable at $4million
2)Bonds are retired using $million from proceeds of an issue of $10million ordinary shares of $1 per value issued at the premium of $0.5
3) $5million of merchandise inventory is acquired on account
4)$ 2.5 dividend per share is proposed by the directors on 750 000 outstanding shares
5) the disposal for a piece of machinery for $1.5millon each. The original price was $5million and the accumulated depreciation as at the date of disposal was $2.5million
On March 1, 2002, Tahir Muktar, a famous businessman in Addis, opened a business named “Universal Garage” which is organized as a sole proprietorship. The business is established to render car repair, maintenance and related services for fees. Below are chart of accounts for and selected transactions completed by Universal Garage in March 2002.
Mar 1 Received the following assets from its owner, Tahir:
Cash....................................... Br, 8,300
Supplies ................................. 2,000
Office Equipment................... 10,000
2 Borrowed Br 5,000 from Dashen Bank
3 Paid Br 1,800 for rent on a building leased for business purposes
3 Purchased welding and other repair machinery for Br 3,600 cash
4 Paid Br 200 for a radio advertisement
8 Sold for Br 200 cash an old office equipment with a recorded cost of Br 200
13 Paid weekly salary Br 1,200
16 Received Br 4,400 from services rendered on cash
20 Paid weekly salary Br 1,200 include transactions for other income
20 Delivered service on credit, Br 6,000
21 Purchased additional repair machinery on account for Br 2,000 from Sámi-Engineers
23 Received Br 5,000 additional cash investment from its owner
24 Repaid Br 1,000 bank loan and paid Br 100 interest on bank loan
26 Purchased supplies for Br 800 cash
27 Paid Br 100 for customer entertainment and other items
27 Paid weekly salary Br 1,200
31 Paid Br 500 for electricity and other utilities consumed during the month
31 Received Br 4,200 cash from credit customers
31 Paid Tahir Br 1,800 for personal uses
Required:
Journalize the above transactions in a two-column journal
Post the journal entries to “T” accounts
Prepare and complete a worksheet based on the following additional information
Cost of supplies remained unconsumed on Mar 31 is Br 900
The amount paid on Mar 3 is for a three-month rent
The amounts of depreciation for machinery and office equipment are estimated to be Br 560 and Br 1,900 respectively
Universal Garage usually pays Br 1,200 for employee's salary every saturday for a six-day work week ended on that day
Interest on bank loan accrued but not paid on March 31 total Br 100
Prepare financial statements for the month
Journalize and post adjusting entries
Journalize and post closing entries
Prepare post-closing trial balance
The Barb Company has provided information on intangible assets as follows:
1. A patent was purchased from the Lou Company for $1,500,000 on January 1, 2006. Barb estimated the remaining useful life of the patent to be 10 years. The patent was carried in Lou’s accounting records at a net book value of $1,250,000 when Lou sold it to Barb.
2. During 2007, a franchise was purchased from the Rink Company for $500,000. In addition, 5% of revenue from the franchise must be paid to Rink. Revenue from the franchise for 2007 was $2,000,000. Barb estimates the useful life of the franchise to be 10 years and takes a full year’s amortization in the year of purchase.
3. Barb incurred research and development costs in 2007 as follows:
Materials and equipment ..... $120,000
Personnel .......... 140,000
Indirect costs ......... 60,000
$ 320,000
Barb estimates that these costs will be recouped by December 31, 2008.
4. On January 1, 2007 Barb, based on new events that have occurred in the field, estimates that the remaining life of the patent purchased on January 1, 2006 is only five years from January 1, 2007.
Unity University
Department of Accounting and Finance
Working Capital Management (ACFN 342)
Assignment Two (For ACFN 2011)
By Ins. Fitsum T
It is group assignment ( with a group of 2 to 3 individuals)
It should be on hand writing form and you have to submit on the due date.
Write your name, ID, section and other information at the separate cover page.
Part 1. From the information given below construct ECL company cash budget for six months period starting from January 2020 till June 2020.
ECL all sales are made on credit terms of 2/10, net 30, meaning that a 2 percent discount is allowed if payment is made within 10 days, and, if the discount is not taken, the full amount is due in 30 days. However, like most companies, ECL finds that some of its customers delay payment up to 60 days. Experience has shown that payment on 30 percent of ECL’s dollar sales is made during the month in which the sale is made — these are the discount sales. On 70 percent of sales, payment is made during the month immediately following the month of sale.
The costs to ECL materials average 60 percent of the sales prices of the finished products. These purchases are generally made one month before the firm expects to sell the finished products, but ECL’s purchase terms with its suppliers allow 40% on cash on the purchased date and 60% to delay payments for 30 days. Accordingly, if January sales are forecasted at $100 million, then purchases during December will amount to $60 million and out of this $24 million of cash will be paid on December and the remaining $36 million will actually be paid in January.
ECL makes estimated tax payments of $12 million on February and $15 million on May. Also, a $70 million payment for a new plant must be made in April and $25 million payment for research and development must be made in March. Assuming that ECL’s target cash balance is $8 million, and that it projects $10 million to be on hand on January 1, 2020, what will its monthly cash surpluses or short falls are for the period from January to June?
Such other cash expenditures as wages, lease payments and other expenses are also built into the cash budget along with gross sales as follows
Months
(in 2002) sales wage s. lease pay. Oth.
December $250
January $350 $35 $12 $7
February $350 $60 $12 $15
March $400 $150 $12 $15
April $400 $155 $12 $12
May $400 $110 $12 $9
June $450 $65 $12 $8
July $300
N.B the projected sales and projected expenditure are in Million dollars.
Part 2. Optimum Cash balance
1. Green Incorporation has an annual cash demand of $1.5 million. Transaction cost is given as $ 100 per purchase or sale of securities. Interest on borrowings is given as 10 percent. Determine constant cash injections, using Baumol model.
2. OMEGA Investments Incorporation has an annual cash demand of $ 500,000. Transaction cost is given as $ 150 per purchase or sale of securities. Interest on borrowings is given as 8 percent. Determine constant cash injections, using Baumol model.
3. ABC Limited sets its minimum cash balance as $ 2,000 and estimates the following:
Transaction cost per sale/purchase = $ 10
Standard deviation………………. = $ 1,000 per day
Interest rate ……………………… = 10.95 percent per annual. Or 0.03 per day
Calculate the spread using Miller-Orr model?
How can I add account balances from a following openIng balance from the trial balance
second question what it means finishing a history in a sage 50
Regarding the information provided below, propose the entries to post for each of the sections:
- a) We start a consultancy company with the legal minimum cash contribution. The share capital is €350,000 and the formalisation costs are 2% of the share capital. We account for the issuance and subscription, as well as the disbursement. We decide to use annual accounting.
- b) We require that all shareholders contribute the pending share capital (uncalled capital). They do so after one week. We account for the two moments separately.
- c) Since the business is going very well, we decide to pay an interim dividend for a total of €2,700. One week later, we make the payments with a 21% withholding. We account for the decision and payment separately.
- d) The following year, we hold an annual general meeting. The profit from the previous year was €95,500 and we decide to apply it as follows:
- to the legal reserve (in accordance with Spanish legal regulations)
- dividends: 2% of share capital (including interim dividend)
- to the voluntary reserve: the remainder
- e) We increase the capital by €100,000 with an additional premium that we must calculate. Contributions are in cash and for the legal minimum. We account for each of the steps: issue; subscription; and disbursement.
Company X wants to increase its capital to finance the international expansion included in its strategic plan for the period X6-X9. To do so, the company is considering the incorporation of a new shareholder that subscribes 80,000 new shares.
Equity for Company X before this capital increase is:
Capital 3,000,000 (300,000 shares, €10 par value each)
Reserves 1,200,000
Current shareholders do not wish that this capital increase damages the net book value of their current shares.
Required
Can you record the corresponding entry/ies for this capital increase knowing that the new shareholder will pay out the legal minimum required at the same moment as the capital increase, and that he/she will pay the rest within the next two months?
Questions:
1. What is the net book value of a share of Company X before and after the capital increase?
2. Discuss the difference between book value and market value
