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intermediate accounting

Accounting 9th edition Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett - Solutions

During the year ended 30 June 2016, Fast Fones Industries Pty Ltd incurred the following costs.Direct labourDirect materialFactory overhead$751 2002 855 6006 853 440The company charges factory overhead costs to work in process inventory and finished goods inventory using an
During the year ended 30 June 2016, Beautiful Bottles Pty Ltd incurred the following costs:Direct labourDirect materialsFactory overhead$326 400445 250913 920The company charges factory overhead costs to work in process inventory and finished goods inventory, using an overhead
Management uses different costs for different purposes in decision making. Included in the different costs are product costs, period costs, variable costs and fixed costs.RequiredAs a manager, choose the concept of cost mentioned that best describes the cost involved in each of the following
Information from the records of Manufacturing Systems Pty Ltd for the year ended 30 June 2016 is given below.Factory overhead, 150% of direct material costDirect labourRaw material inventory, 1/7/15Cost of goods manufacturedRaw materials inventory, 30/6/16Work in process inventory, 1/7/15Raw
Information from the records of Smart Manufacturing Systems Pty Ltd for the year ended 30 June 2016 is given below.Factory overhead, 200% of direct labour costRaw materials inventory, 1 July 2015Cost of goods manufacturedRaw materials inventory, 30 June 2016Work in process inventory, 30 June
Below is selected financial data extracted from the accounting records of Wilson Manufacturing Pty Ltd for the year ended 30 June 2016.Beginning work in processEnding work in processBeginning raw materialsEnding raw materialsIndirect materialsPurchases of raw materialsDirect labourIndirect
Smart Manufacturing Systems Pty Ltd provides the following information:Administrative salariesAdvertising expenseDirect labourFactory depreciationFinished goods, 1 July 2015$ 20 00012 00030 0006 00020 000Finished goods, 30 June 201618 000Income tax
Listed below are selected financial data from the accounting records of Innovative Computers Pty Ltd for the year ended 30 June 2016.Cost of goods manufacturedEnding finished goodsIncomeBeginning finished goodsSelling and administrative
As the marketing manager for Fast Fones Industries Pty Ltd you have asked the accountant what it costs to make the FFI2020 model as you want to set a price for the phone. A similar phone produced by a competitor sells for $420. Your usual pricing policy is to set the price of phones at the cost of
Innovative Computers Pty Ltd produces laptops. Each computer contains a rechargeable battery and LCD screen. Batteries and screens are purchased from an outside supplier for $96 and $150 each, respectively. The production process is highly automated with an annual depreciation charge of $720
As the Human Resources manager for Beautiful Bottles Pty Ltd, a company manufacturing bottles for the food industry, you have been asked by the accountant to help reduce the product costs of each bottle. You have compiled the following information to help with the decision:Number of bottles
Classify the following items as being either product costs or period costs:1. Depreciation on a vehicle used by the entity’s general manager2. Containers used to package finished goods3. Salaries of workers handling inventory during production4. Rent on the premises5. Lease payments on a motor
There are differences between the inventories of a manufacturing entity and a retail entity. Do these differences have any effects on the financial statements of the two types of entities? Explain these differences and their effects on the financial statements.
You are the new accountant for Ted Cowpitt, who runs his own small pottery manufacturing business. Ted says, `I can’t see why it is so difficult to work out the value of my pottery inventory, surely you just need to know roughly how much clay is used in each one and multiply that by the cost of
‘Accounting for inventories for a manufacturer is rather pointless if the periodic system of inventory is used. Only by using the perpetual inventory system can meaningful information for management decision making become available.’ Discuss this statement.
Smart Manufacturing Systems Pty Ltd is a small manufacturing business that houses its manufacturing operations, selling activities and administration activities in the one building. The insurance premium on this building is $9000 for the reporting period concerned. Recommend how this cost should be
As a graduate accountant one of the first things you have been asked to do by your employer, Smart Manufacturing Systems Pty Ltd, is to write a memo to senior management explaining the difference between absorption and direct costing and to outline which one is required by the accounting standard
The senior management of a manufacturing entity decided to overhaul its approach to managerial performance evaluation. Paul Tyler, manager in charge of production, is informed that as a result of the new policy he will be held ‘responsible only for controllable costs, i.e. the direct costs of
Explain the difference between product and period costs. Is labour cost a period cost, a product cost, or can it be both?
As the new marketing manager for Fast Fones Industries Pty Ltd , a company that manufactures mobile phones you need to learn about the accounting system for the business. Why is it important that marketing managers have some understanding of the accounting processes within a manufacturing business
‘Accounting for cost of sales in a manufacturing entity creates no more problems than those encountered in a retail entity.’ Discuss this statement.
Many non-accountants confuse the terms cost and expense. As an accounting student, explain the difference between a cost and an expense using a relevant example.
Refer to the latest financial report of JB Hi-Fi Limited on its web site, www.jbhifi.com.au, and answer the following questions:Required1. JB Hi-Fi Limited is one of Australia’s major retail organisations. After reviewing the financial report, what types of different accounting journals, if any,
Fremantle Fisheries (FF) operates a fleet of fishing boats out of three ports in Western Australia — Fremantle, Bunbury and Geraldton. Each port has its own fishing fleet and all seafood caught is sold through the Fish Marketing Board, a board established by the state government. The accounting
Teresa Greene owns and manages a craft and material shop called All Sewn Up. Most of the revenue of All Sewn Up is from the sale of craft materials, although some revenue is made by giving craft lessons to groups of six customers at a time. As Teresa’s shop relies on a large number of suppliers
You have been asked for an opinion on the accounting system that would be most suited to the needs of this company. Give your response to the following queries:A. Should the company use a sales journal? Why or why not? If a sales journal is used, what procedures would you recommend to record
The post-closing trial balance of Raschella Ltd as at 1 November 2016 contained the following normal balances:Account no.Account titleAccount balance110011201130114011501160121012151220122521102120215031103120411041154120511051155120513051405150Cash at BankAccounts ReceivableBills
Salmon Swim Centre uses a sales journal, purchases journal, cash receipts journal, cash payments journal and a general journal. The business also maintains subsidiary ledgers for accounts receivable and accounts payable, in addition to the related control accounts (ignore GST). The relevant
On 30 June 2016 the following information appeared in the accounting records of Ndung and Mkoka:Balance of Accounts Receivable Control account, $3725Total of schedule of accounts receivable, $1970Balance of Accounts Payable Control account, $5010Total of schedule of accounts payable,
The accountant for House of Hardware, Ricky Hammer, was unable to complete the trial balance of the business’s general ledger. The total of the credit column was less than the total of the debit column by $1760. In addition, the balance of the Accounts Receivable Control account in the general
On 1 June 2017, Aaron Draper began trading as a landscape material supplier. The transactions for the month of June 2017 were as follows (ignore GST):June1123456891011121416171819212223242630Draper transferred $120000 from his personal savings to his business bank account.Purchased shop fittings
Galluzo Ltd uses a sales journal, a cash receipts journal, a general journal and an accounts receivable subsidiary ledger within a periodic inventory system. The terms of all credit sales are 2/10, n/30. Where necessary, round amounts to the nearest dollar.The accounts receivable subsidiary
You are the person responsible for the accounts payable ledger of Cameron Ltd. You are concerned that the statement of account for the month ending 30 June 2016 received from Deveson Ltd does not agree with the records shown for Deveson Ltd in the accounts payable subsidiary ledger. As a valued
Ravilero Ltd uses the periodic inventory system and has control accounts and subsidiary ledgers for trade receivables and payables. The general ledger control account balances at 1 June 2016 were:Accounts receivable controlAccounts payable control$116 480136 600The following transactions
Bush Basher Bikes sells off road motorbikes on both a credit and cash basis. They stock a full range of spare parts and accessories. The business also employs a full-time mechanic who carries out servicing and repairs on motorbikes — those sold by Bush Basher Bikes as well as those purchased from
Tymonns Traders Ltd uses sales and purchases journals in its accounting system. The following transactions occurred during April 2016.April581016192629Purchased merchandise on account from Smythe Ltd, invoice 354, $1500, terms 2/10, n/30.Purchased merchandise on account from Ellis Ltd, invoice 376,
Alana Szeqczyk’s accounting system that uses sales, purchases, cash receipts and cash payments journals and a general journal. At various times during the year, the following errors have occurred.1. The amount column in the sales journal was incorrectly totalled.2. The amount of a bank loan
Rowett and Sharrad uses sales, cash receipts and general journals in its accounting system. The firm also maintains an accounts receivable subsidiary ledger, which contained the following accounts on 31 August:S. WhiteDateExplanationPost
Hansford and Harding use purchases, cash payments and general journals with their accounting system. They also maintain an accounts payable subsidiary ledger, which contains the following accounts at 31 July:L. JessupDateExplanationPost
Crawford & Co. uses sales and purchases journals in its accounting system. The following transactions took place during April (ignore GST):April251215212529Purchased inventory on credit from Bryden Ltd, invoice 567, $560, terms 2/10, n/30.Purchased inventory on credit from H. Rider, invoice
Di Ieso & Daughters uses sales, purchases, cash receipts, cash payments and a general journal (ignore GST). The following column totals were taken from the entity’s journals at the end of June:1. Sales journal2. Purchases journal3. Cash receipts
At 1 February, the following information was extracted from the records of David Hendry (assume no GST):Schedule of Accounts Payableas at 31 January 2016D. GeelanBanks LtdNguyen Ltd$ 5255 250 5 560$11 335Extracts from the purchases, cash payments and general journals for
Model Trains Enthusiasts Shop’s sales and cash receipts journals for the month of April are presented below. The accounts receivable subsidiary ledger is reconciled with the general ledger account each month. On 1 April, the subsidiary ledger had four accounts: A. Tilden — $430; L. Tran —
Mazzone and Associates Accounts Receivable Control account in the general ledger on 1 September was $17 755. The subsidiary ledger contained the following accounts receivable accounts and balances at the same date: Quach $2330, Ridley $4277, Scafidi $3337, Talbot $7811. At 30September, a summary
Casey Ltd’s accounting system uses special journals and subsidiary ledgers. The following transactions occurred during October 2016 (GST is ignored). All sales are n/30.Oct31113182427Purchased inventory from P. Forza, $1030, terms 2/15, n/30.Sold goods to B. Harley on credit, invoice 435,
The accounting system for Barker Ltd uses a general journal and special journals for sales, purchases, cash receipts and cash payments.RequiredA. What journal would be the most probable source of the postings in the accounts?B. Which of the above accounts would be affected if GST was recorded? Cash
Fiona Spottiswoode uses a purchases journal, a cash payments journal, a sales journal, a cash receipts journal and a general journal. Indicate in which journals the following transactions are most likely to be recorded:1. Issue of shares for cash.2. Purchased inventories on credit.3. Cash purchase
Overton’s Outdoor Centre is owned and run by Kym Overton, using the periodic inventory system and balancing her books at month-end. At 30 April 2016, the balances of the Accounts Receivable Control and Accounts Payable Control accounts were $59 560 and $34 570 respectively. Ignore GST.A summary
Cosimo’s Cookware bought merchandise from three suppliers during September on credit, as shown in the Accounts Payable Control account on the next page.General LedgerAccounts Payable ControlDateExplanationPost RefDebitCreditBalance 1/9 6/910/914/930/930/9BalanceGJGJGJP?585?
Assume that Xinshan’s China sold merchandise to three customers during June on credit, as shown in the following Accounts Receivable Control account.General LedgerAccounts Receivable ControlDateExplanationPost RefDebitCreditBalance 1/6 5/630/630/6BalanceGJ8
J. Fry uses subsidiary ledgers and special journals in his accounting system. The accounts in the accounts payable subsidiary ledger for the most recent month are shown below:RequiredA. Prepare the Accounts Payable Control account showing the final balance of the account, assuming that all
‘Since nearly all accounting functions today are computerised, there is really no need for accountants to have an understanding of manual accounting systems.’ Do systems designers need to understand manual accounting systems? Discuss.
Which journal(s) would be used to record the following transactions? The business is registered for GST.(a) The introduction of cash and office equipment by the owner on establishment of the business.(b) The cash payment of rent in advance.(c) The purchase of
Explain the treatment of sales returns and allowances and purchases returns and allowances in special journals, under both the periodic and perpetual inventory systems. How would these items be recorded on an inventory record in the subsidiary ledger? Why?
Critically examine the following remark: ‘By having the post ref. column in all of the special journals, the recording process is slowed down, and too much unnecessary detail is provided for very little purpose’.
An inventory purchase on credit of $10 000 plus GST was correctly recorded in the purchases journal of a business. However, when postings were made to the accounts payable in the subsidiary ledger, the purchase was incorrectly recorded as $1100; however, the correct amount was posted to the
Identify the major sources of cash receipts recorded in a cash receipts journal. Identify the major transactions which involve cash payments in the cash payments journal.
During the month of October, credit sales for a business actually amounted to $963 534. However, an error of $10 000 had been made in totalling the sales column of the sales journal. When and how will this error be discovered?
‘In a system which uses several special journals, it is not necessary to have a general journal.’ Do you agree? Explain.
What is an internal control system? Discuss the principles involved in establishing a good internal control system. Discuss also the limitations of internal control systems.
‘Accountants should not concern themselves too much with elaborate administrative and accounting controls in an internal control system, since any such system is only as good as the human element in the system.’ Do you agree? Explain your answer.
Refer to the consolidated financial statements in the latest financial report of JB Hi-Fi Limited on its website, www.jbhifi.com.au, and answer the following questions:1. List the subsidiary companies in the JB Hi-Fi Group.2. What is the value of the group’s sales revenue for the current and
A large wholesale business in Melbourne’s northern suburbs has run into difficulties in the past few years due to a fall in demand from retailers for certain product lines. The CEO of the business and other senior managers, including the sales manager, were appointed on the basis that they will
Read the following article and answer the questions that follow.Fresh approach to curb shopliftingAccording to the most recent Global Retail Theft Barometer (GRTB) put out by Britain’s Centre for Retail Research, employee theft accounted for 35 per cent, or $41.7 billion, of global shrinkage at
Explain the main differences between the two methods of accounting for inventory and how each method works. Which method of inventory has the All That Sparkles Store been using? Which inventory method would you recommend when the computerised accounting system is installed, and why?The All That
Ben’s Patisserie had the following balances in its ledger at 30 June 2016.Cash at bankAccounts receivableInventoryPrepaid insuranceOffice supplies on handFurniture and fixturesAccumulated depreciation – furniture and fixturesDelivery equipmentAccumulated depreciation – delivery
The income statement below for Guildford Granaries was prepared by the accountant from the accounting records at 30 June 2017. This statement showed a significant improvement over the preceding year when the profit for the year ended 30 June 2016 was $344 700.On 14 July 2017, while reviewing
The following data have been extracted from the income statement of Llandilo Furniture Store.20172016Net salesCost of salesProfitInventory (ending)$545 600332 130102 35074 760$601 950356 740145 32079 200RequiredA. Calculate the gross profit ratio, profit
Pete’s Computer Shop is a sole trader run by Pete Narellan. The unadjusted trial balance of Pete’s Computer Shop is shown below.PETE’S COMPUTER SHOPUnadjusted Trial Balancefor the year ended 30 June 2017AccountDebitCreditCash at bankAccounts receivableInventory (1 July 2016)Prepaid
The following selected information is available for Middleton Wholesalers for September 2016.PurchasesSalesFreight inwardsDiscount receivedBeginning inventory, 1 September 2016Ending inventory, 30 September 2016Purchases returns and allowancesSales returns and allowancesFreight outwardsRent
Seaforth Sunglasses had the following transactions in December. The beginning inventory on 1 December consisted of 320 pairs of sunglasses at $80 each.Dec.3914262731Purchased 302 pairs of sunglasses for $80 each on credit.Returned 10 pairs of sunglasses that had scratches in the lenses.Sold 190
A trial balance for Flemington Fashions Pty Ltd is shown below.FLEMINGTON FASHIONS PTY LTDUnadjusted Trial Balanceas at 30 June 2017AccountDebitCreditCash at bankAccounts receivableInventorySuppliesGST receivableStore equipmentAccumulated depreciation – store equipmentAccounts payableLoan
Cliff Clarendon opened a wine store on 1 June 2016. The business trades under the name of Wine to Dine and uses a perpetual inventory system to account for its inventory. The business was registered for GST. All credit sales are made on the following terms: 2/10, n/30.Transactions for the business
Complete all of the requirements of problem 6.6, assuming that Vaucluse Ltd is registered for the GST. Assume that dollar figures quoted in problem 6.6 are ex GST. Hence, the selling price of consoles is now $132 including GST, the purchase price is now $99 including GST and the freight charge paid
Vaucluse Ltd sells handheld video consoles for $120 each. It buys the consoles for $90 each. On 1 June 2017, 60consoles are in inventory. Vaucluse Ltd completed the following transactions during June (ignore GST):June12458101214232429Sold 12 consoles for cash.Paid the supplier for 24 consoles
Dundas Desks buys desks for $80 each and sells them for $140 each. On 1 August 2016, 86 desks were in inventory. Dundas Desks completed the transactions below during August.Aug.2348101213182023Purchased 140 desks on account. Terms: 2/10, n/30, EXW supplier’s warehouse.Paid freight cost of $120 on
Assume that Merryland’s Markets had an inventory balance of $32 570 at the close of the last accounting period. The following sales and purchase transactions are for the current period:1. Purchased goods on account for $27 190.2. Returned part of the above purchase that had an
On 28 February 2016, Darwin-based entity, Phonee Partners, had inventory of 480 phones at a total cost of $153 600. The business maintains a perpetual inventory system. The following transactions occurred during March 2016:March25811182024262931Purchased 280 phones on credit for $280 each from
The following transactions relate to the businesses of L. Lakemba and F. Fairlight. Both businesses use a periodic inventory system.June7141526Lakemba sold goods to Fairlight for $3400. Terms were 2/10, n/30.Fairlight paid Lakemba the net amount due.Lakemba sold goods to Fairlight for $2470. Terms
Schofield’s Stores carried out the following transactions relating to a single product in October:Oct.511131926Purchased 100 units for $60 each on credit.Returned 6 units which were unsuitable.Sold 112 units for $90 each on account.A customer returned 3 units sold on 13 October.Sold 35 units for
Use the following information from the records of Preston Partners to prepare an income statement under the periodic inventory system for the year ended 30 June 2017.PurchasesInventory, 1 July 2016Inventory, 30 June 2017Selling and distribution expensesSalesPurchases returns and allowancesSales
The Confiture Factory in central Adelaide buys sculptures, flat ware and jewellery from a number of private artists around the country. The Confiture Factory always purchases the products from the suppliers on the terms EXW (place of seller’s business) and usually sells to customers on the basis
Chloe’s Clothing Importers sells clothing with credit terms of 3/15, n/30. A trade discount of 30% is given to purchases made by wholesalers. On 6 September 2016, Kingsbury Wholesalers purchased clothing with a list price of $176 000 from Chloe’s Clothing Importers. The clothes had cost the
Refer to the information in exercise 6.6 and assume now that both businesses are registered for GST.RequiredRecord the transactions in the general journal of 1. Watsonia Stores and 2. Viewbank Market.Data from exercise 6.6:The following are selected transactions of Watsonia
The following are selected transactions of Watsonia Stores:July121921Sold goods on account to Viewbank Market for $1200, terms 2/10, n/30. The cost of the goods sold was $800.Forwarded a credit note for $90 to Viewbank Market covering part of the goods sold on 12 July, which cost $60, that were
Using the periodic inventory system, prepare general journal entries to record transactions (1) to (7) in exercise 6.4, assuming the business is registered for the GST, and that GST has to be added to the figures given.Data from exercise 6.4:1. Purchased inventory on credit for $58 200.2. Sold
Using the periodic inventory system, prepare general journal entries for the following transactions of Heidelberg Housewares (assume no GST):1. Purchased inventory on credit for $58 200.2. Sold inventory for $18 800 in cash and $16 730 on credit.3. A customer returned goods she had bought on credit
Using the perpetual inventory system, record transactions (1) to (7) in exercise 6.2 in the general journal assuming the business is registered for GST, and that GST has to be added to the figures given.Data from Exercise 6.2:1. Purchased 240 units for $220 each on credit.2. Returned 12 units to
Using the perpetual inventory system, record the following transactions in the general journal of Fitzroy Ltd (assume GST does not apply):1. Purchased 240 units for $220 each on credit.2. Returned 12 units to the supplier.3. Sold 48 units for $380 each on credit.4. Purchased office supplies for
A. Prepare general journal entries to record the following transactions (a) For Elwood Ltd and (b) For Balaclava Ltd. Both companies use a periodic inventory system. (Assume neither is registered for GST.)April3578Elwood Ltd sold merchandise to Balaclava Ltd for $3250 with terms 2/10,
Describe the ratios that may be used by management to assess the profit performance of a retail business. Explain the factors which could contribute to adverse trends developing in these ratios.
Having examined the income statements for the last 2 years, the manager of a small business noticed that, in spite of the prosperous result for the current year, the income recognised as ‘discount received’ had fallen sharply from the previous year. Upon investigation, she found that the new
Why do businesses that use a perpetual inventory system continue to perform a physical stocktake at least once a year?
Prepare the general journal entries that are needed to record the transactions of Transformer Ltd.1. Issued 100000 shares for $200000.2. The board of directors declared a cash dividend of 50c per share.3. The cash dividend declared in (2) above was paid.4. Close the Profit or Loss Summary account
The management consulting firm of the Zimbardi Sisters supplied the following information as at 30 June 2016, the end of the financial year.1. Interest earned but not received totals $2600.2. The June electricity account for $1142 has not been paid or recorded.3.
The accountant of the marketing firm, S. Preston, has posted adjusting entries (1) to (5) to the ledger accounts at 30 June 2016. All the income, expense and equity accounts of the entity are listed here in T-account form.RequiredA. Prepare the closing entries of the marketing firm at 30 June
The account balances taken from the trial balance and adjusted trial balance columns of the worksheet of Tran’s Transcription Service for the year ended 30 June 2017, the first year of operations, are shown below.RequiredA. Reconstruct the 10 column worksheet for the year.B. Prepare the income
On 30 June 2017, the adjusted trial balance of Outback Car Rentals showed the following selected balances:Rental revenueInterest expenseRentals receivableInterest payable$740 00017 00042 0008 200Both the Rentals Receivable and Interest Payable accounts had been recorded as a result
On 30 June 2017, the accountant for Nigel the Maintenance Man calculated that 1 month’s interest of $420 had accrued on a bank loan. An interest payment of $1600 was made on 30 September 2017.RequiredA. Give the adjusting entry needed on 30 June 2017.B. Give the closing entry.C. Give the
On 1 January 2016, the equity of Deadwood Pty Ltd consisted of share capital of $800 000 and retained earnings of $260 000. During the period, the company declared and paid a cash dividend of $70 000. The general ledger contains only two income statement accounts — Revenues and Expenses. On 31

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