Inventory turnover 84000001200000 16000002 6 times Inventory on hand average

Inventory turnover 84000001200000 16000002 6 times

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Inventory turnover = 8400000/(1200000 +1600000)/2 = 6 times Inventory on hand average days = 365/6 = 60.8 days 15
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Question 21 Wages 1200 – ([email protected]%) – 100 = 884 net weekly pay Debit Wage/salary expense 1200 Credit PAYG liability 216 Credit Medical fund liability 100 Credit Bank 884 Debit Superann guarantee expense 114 Credit Super guarantee liability 114 Question 22 Leave owed: ($52000 x 4/52) x 117.5% = 4 700 Debit Annual leave expense 4700 Credit Provision for annual leave 4700 Debit Provision for annual leave 2350 Credit Bank 2350 Question 23 So assume telephone is used equally each month. Expected expense for June 6240/3 = 2080 Debit Telephone expense 2080 Credit Accrued Telephone 2080 Debit Income Summary 21280 Credit Telephone expense 21280 Question 24 12000 units X 8% = 960 units X $400 = $384000 warranty expense Debit Warranty expense 384000 Credit Warranty payable 384000 Debit Warranty payable 300000 Credit Inventory 300000 16
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Question 25 Debit Plant 36000 Debit GST Clearing 3600 Credit Accounts payable 39600 Depreciation year 1: 36000 @ 40% = [email protected] 3/12 years = 3600 30 June 2010 Debit Depreciation 3600 Credit Accumulated depreciation 3600 30 June 2011 36000 – 3600 = 32400 @ 40% = 12960 Debit Depreciation 12960 Credit Accumulated depreciation 12960 30 June 2012 32400– 12960 = 19440 @ 40% = 7776 Debit Depreciation 7776 Credit Accumulated depreciation 7776 30 June 2013 19440– 7776= 11664 @ 40% = 4666 Debit Depreciation 4666 Credit Accumulated depreciation 4666 31 October 2013 11664 – 4666 = 6998 * 40% = 2800 X 3/12 =700 Debit Depreciation 700 Credit Accumulated depreciation 7000 (I depreciated just to 30 Sept – in practice ignore 5 days) Debit Bank 2200 Debit Accumulated Depreciation 29702 (3600+12960+7776+4666+700) Debit Loss on disposal 4298 Credit GST Clearing 200 Credit Plant 36000 17
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Question 26 Depreciation expense: 36000 – 6000 = 30000 / 5 years = 6000 First year = 6000 X 3/12 = 1500 30 June 2009 Debit Depreciation 1500 Credit Accumulated depreciation 1500 30 June 2010 WDV = 36000 – 1500 = 34500 – residual 6000 = 28500 3 years remaining life 28500 /3 = 9500 Debit Depreciation 9500 Credit Accumulated depreciation 9500 Note: I am changing the current and the future year’s depreciation (so after this year there is 2 years life – so current and 2 future years = 3 years). Question 27 Net assets beginning 40000 Net assets end 55000 Increase in equity 15000 Add drawings 10000 Less additional contribution (4000) Profit 21000 18
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Question 28 Definition: Past event – yes there has been an accident Outflow economic resources – yes requires clean up Present obligation – yes as company has a widely published policy that it will clean up contamination Yes – meets the definition, now look at recognition criteria: Probable that outflow will occur: yes Reliably measure- not clear need to discuss whether realistic estimate can be determined I believe this will be a liability but would accept that it is not if students argued that measurement may not be reliable. Question 29 Gross profit: $1,640,000 x 0.6 = $984,000 Cost of goods sold: $1,640,000 x 0.4 = $656,000 Thus: Cost of goods available for sale = $1,220,000 Cost of goods sold = 656,000 Ending inventory $ 564,000 Question 30 As damages have been awarded against Tandy this ruling creates a liability. Issue is whether this meets the recognition criteria of reliable measurement. You need to discuss this and then make a call.
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