Reference no: EM133716343

Accounting for Managers

Question 1

Part A
On June 30, 20X1, S&TLtd, a company specialising in electronic goods, adjusted its Provision for Warranties to ensure it equalled 4% of sales for the year ending on that date. The company's sales for the year ending June 30, 20X1, amounted to $1,600,000, and the Provision for Warranties before the adjustment stood at $45,000. Subsequently, on October 6, 20X1, S&T Ltd received a successful warranty claim for faulty goods costing $600.

Required:
I. Prepare the general journal entry dated June 30, 20X1, to adjust the Provision for Warranties to the required level in accordance with 4% of the company's sales for the fiscal year ending June 30, 20X1. This adjustment aims to ensure adequate coverage for potential warranty expenses
II. Record the payment made for the successful warranty claim received on October 6, 20X1, in the general journal format. This entry should accurately document the financial transaction related to the warranty claim, including the date, amount, and relevant accounts affected.

Part B
XYZ Limited is planning to expand its business operations and has decided to purchase a machine on July 1, 20X1, to enhance operational efficiency. The machine is expected to have a useful life of ten years. The invoice for the machine indicates that it was purchased for $667,667. Additionally, freight expenses of $11,333 and installation charges of $15,333 were incurred.

Required:
I. Calculate the total cost of the machine based on the purchase price, freight expenses, and installation charges
II. Assuming XYZ Limited adopts the straight-line depreciation method, calculate the depreciation expenses for the year.
III. Determine the balance of accumulated depreciation on the machine as of June 30, 20X3.

Question 2
The allowance method based on a percentage of net credit sales estimates uncollectible accounts by applying a predetermined rate to net credit sales, recording the estimated bad debt expense and adjusting the Allowance for Doubtful Accounts accordingly. This method ensures adherence to the matching principle, providing a more accurate financial representation and better receivables management.

Blake Mirrors uses the allowance method based on a percentage of net credit sales to record bad debts. For the year, the company had $577,930 in credit sales, with an estimated uncollectible percentage of 4.4%. On May 10, 2023, Blake Mirrors identified an uncollectible account from Anna Thompson amounting to $2,870. However, on August 12, 2023, Anna Thompson made an unexpected payment of $1,441 towards her account.

Required: Record the following journal entries for Blake Mirrors:

A. The year-end adjusting entry for bad debt expense for 2022.
B. The entry to record the identification of Anna Thompson's uncollectible account on May 10, 2023.
C. The entry for the payment received from Anna Thompson on August 12, 2023.

Question 3

Part A
The manager of Fictitious Company requests a detailed analysis of the inventory for the past month. In particular, he needs to calculate both the cost of goods sold (COGS) and the cost of closing inventory using the perpetual inventory system with the first-in, first-out (FIFO) method. The following transactions occurred during the month:

• Beginning Inventory: 800 units @ $50 each
• Purchase: 600 units @ $52 each
• Sale: 400 units (sale price is $80)
• Sale: 350 units (sale price is $90)
• Ending inventory 650 units.

Required:
Prepare inventory card as shown in the Week 9 lecture
Calculate the COGS
Calculate the cost of closing inventory for Fictitious Company.

Part B
Reflecting on your experience completing the SAP ERP assessment, consider the challenges you faced while entering accounting transactions in the procurement and fulfilment modules of SAP ERP S/4 HANA. What strategies did you employ to overcome these challenges, and how did they contribute to your learning and understanding of the system? Additionally, what insights did you gain about the importance of accurate data entry and the role of ERP systems in modern business operations?

Question 4
The "Cash at Bank" account in the ABC Company ledger shows a debit balance of $16,505.33, which includes all bank statement entries. The bank statement shows a credit balance of $16,443.88.

According to ABC Company's records, three cheques recorded in the cash payment journal have not yet been presented to the bank:

• Cheque Number 5466: $752.68
• Cheque Number 5467: $529.88
• Cheque Number 5473: $243.88

Additionally, a cheque for $1,587.88 recorded as a deposit in the cash receipts journal has not been recorded by the bank as of September 30, 20X2.

Required:
Prepare a bank reconciliation statement for ABC Company as of September 30, 20X2, ignoring rounding differences.

Question 5
D&S Limited has encountered various transactions during the year ending on June 30, 2022, necessitating adjusting entries to ensure accurate financial reporting.

The transactions are as follows:

1. During the 2020-2021 financial year, the company purchased a one-year insurance policy set to expire on April 1, 2022. However, as of July 1, 2021, the prepaid insurance balance stood at $9,000.

2. The sales staff is paid weekly for a five-day workweek. On June 30, 2022, it was realized that $9,600 for the current week would be paid on July 3, 2022, despite the current week ending on July 2, 2022.

3. A total sales revenue of $1,985 was deposited by Mr. James for products not yet shipped to him.

4. Office supplies totalling $7,564 were expensed during the financial year ending on June 30, 2022. However, it is recognized that $613 worth of stationary remains useful and can be utilized in the upcoming year.

5. The company pays interest on a bank loan annually on December 31. For the current calendar year ending on December 31, 2022, the interest expense amounts to $5,000.

Required:
Prepare adjusting entries for the above situations as of June 30, 2022, to accurately reflect the financial position and performance of D&S Limited.