535 PA 1

docx

School

Moi University *

*We aren’t endorsed by this school

Course

311

Subject

Accounting

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by oromoclinton

1 Pa 1 Name Institutional Affiliation Instructor Date

2 Part 1 E1-4 Question one: A – Audit Question two: G – Net income Question three: H - IASB Question four: F – Public accountants Question five: C – Ethics E1-5 Question one: G - Dodd-Frank Act Question two: F – Audit Question three: E - Sarbanes-Oxley Act Question four: D – internal controls Question five: C – prevention Question six: B – fraud triangle Question seven: A – ethics E1-6 Question a: C – corporations Question b: P – partnerships Question c: LLC – Limited Liability Company Question d: SP – sole proprietorship Question e: LLC – Limited Liability Company Question f: SP – sole proprietorship Question g: C – corporations Question h: LLC – Limited Liability Company E1-9 Question a Assets = liabilities + equity Assets liabilities equity

3 300,000 = 200,000 + 100,000 80,000 = 30,000 + 50,000 Total assets total liabilities total equity 380,000 = 230,000 + 150,000 Question b Equity = assets – liabilities = 123,000 – 47,000 Equity = $76,000 Question C Assets = liabilities + equity Opening 130,000 = 70,000 + 60,000 During 60,000 = 5,000 + 55,000 Closing 190,000 = 65,000 + 125,000 Part 2 E2- 1 Steps in analyzing transactions 1. B 2. C 3. D 4. A E2-2 Question a: 5 – three Question b: 2 – equity Question c: 4 – liability Question d: 1 – asset Question e: 3 – account

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

4 E2-4 Type of Account Normal Balance As Dr. Or Cr. Question A: Land Asset Dr. Question B: Cash Asset Dr. Question C: Legal Expense Expense Dr. Question D: Prepaid Insurance Asset Dr. Question E: Accounts Receivable Asset Dr. Question F: Dividends Equity Cr. Question G: License Fee Revenue Revenue Cr. Question H: Unearned Revenue Revenue Cr. Question I: Fees Earned Revenue Cr. Question J: Equipment Asset Dr. Question K: Notes Payable Liability Cr. Question L: Common Stock Equity Cr. E2-7 Pose-for-Pics Journal entries DATE PARTICULARS DR. CR. 1 ST AUGUST Cash 6,500 Equipment – photography 33,500 Common stock 40,000 2 ND AUGUST Pre-paid insurance 2,100 Cash 2,100 5 TH AUGUST Office supplies 880 Cash 880 20 TH AUGUST Cash 3,331 Service revenue 3,331 31 ST AUGUST Utility expense 675 Cash 675

5 E2-17 Retained earnings as at 1 st august $0. + Net income 10,470 Total 10,470 - Dividends (6,000) Closing balance for 31 st august retained earnings $4,470 P2 – 3A Question a Date Particulars Dr. Cr. March 1 st Cash 150,000 Office equipment 22,000 Common stock (recording final transaction of cash and office equipment ) 177,000 March 2 nd Prepaid rent 6,000 Cash (Record prepaid rent) 6,000 March 3 rd Office equipment 3,000 Office supplies 1,200 Accounts payable (record office equipment and supplies made on credit) 4,200 March 6 th Cash 4,000 Service revenue (record cash received) 4,000 March 9 th Accounts receivable 7,500 Service revenue (record service revenue received) 7,500 March 12 th Account payable 4,200 Cash (recording cash made) 4,200 March 19 th Prepaid insurance 5,000 Cash 5,000

6 (record payment of insurance in cash) March 22 nd Cash 3,500 Account received (record cash received) 3,500 March 25 th Accounts receivables 3,820 Service revenue (record service revenue received) 3,820 March 29 th Dividend 5,100 Cash (record dividend received) 5,100 March 30 th Office supplies 600 Accounts payable (to record credit purchases) 600 March 31 st Utility bill 500 Cash (record payment of the utility) 500 Question 2 Cash account Dr. Amount Cr. Amount common stock 150,000 Pre-paid rent 6,000 Accounts payable 4,200 Service revenue 4,000 Pre-paid insurance 5,000 Accounts received 3,500 Dividend 5,100 Utility bill 500 Office equipment 22,000 Balance carried down 136,700 179,500 179,500 Balance b/d 136,700 Common stock account Dr. Amount Cr. Amount Balance c/d 150,000 Cash 150,000 150,000 150,000 Bal b/d 150,000 Office equipment account

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

7 Dr. Amount Cr. Amount Accounts payable 3,000 Bal c/d 22,000 Cash 22,000 22,000` 22,000 Bal b/d 22,000 Pre-paid rent account Dr. Amount Cr. Amount Cash 6,000 Bal c/d 6,000 6,000 6,000 Bal B/d 6,000 Office supplies account Dr. Amount Cr. Amount Accounts payable 1,200 Bal c/d 1,800 Accounts payable 600 1,800 1,800 Bal b/d 1,800 Accounts payable account Dr. Amount Cr. Amount Cash 4,200 Office equipment 3,000 Bal C/d 600 Office supplies 1,200 Office supplies 600 4,800 4,800 Bal b/d 600 Service revenue account Dr. Amount Cr. Amount Bal c/d 15,320 Cash 4,000 Accounts receivables 7,500 Accounts receivables 3,820 15,320 15,320 Bal b/d 15,320 Accounts receivable account Dr. Amount Cr. Amount Service revenue 7,500 Cash 3,500 Service revenue 3,820 Bal c/d 7,820 11,320 11, 320 Bal B/d 7,820 Pre-paid insurance account Dr. Amount Cr. Amount Cash 5,000 Bal c/d 5,000

8 5,000 5,000 Bal B/D 5,000 Dividend account Dr. Amount Cr. Amount Cash 5,100 Bal c/d 5,100 5,100 5,100 Bal B/d 5,100 Utility bill account Dr. Amount Cr. Amount Cash 500 Bal c/d 500 500 500 Bal b/d 500 Question three Denzel Brooks Trial balance Dr. Cr. Cash 136,700 Common stock 150,000 Pre-paid account 6,000 Office supplies 1,800 Accounts payable 600 Service revenue 15,320 Accounts receivable 7,820 Pre-paid insurance 5,000 Dividend 5,100 Utility bill 500 162,920 162,920 Part 3 Coca-Cola company is a multinational company based in Atlanta USA mainly dealing with the production of beverages mainly known with the production of Coca-Cola drinks. The company also engages in the sale, manufacturing and marketing of non-alcoholic beverages and syrups ( Kakani, 2016 ). The popular soft drink was formally introduced by John Stith Pemberton a pharmacist and at the time of its production, the product contained cocaine retrieved from the

9 coca leaves and caffeine from the kola nuts that all together acted as stimulants. The coca and Kola are the source of the products name that led to the name of Coca-Cola. John Stith Pemberton had formulated the beverage as a patient medicine during the civil war to control his addiction. In 1889, the brand was sold for $2,300 to the Asa Griggs Candler who then incorporated the Coca-Cola Company in Atlanta in 1892. Since then, it has operated as a franchise distribution system with now largely producing the syrup concentrate that is then sold to various bottlers companies around the world holding their exclusive territories. Financial analysis Gross profit margin

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

10 The ratio measures the profitability that shows a percentage of the revenue that exceeds the cost of goods sold. The ratio is used to show how a company is successful in generating revenue based on the costs involved in producing goods and services. The ratio is then determined by dividing the gross profit by the net revenue and multiplying by 100%. We can therefore deduce the gross profit margin as below calculations ( Welc, 2022 ). Gross profit margin = gross profit/net revenue * 100% =23,298/38,655 * 100% =60.27% The ratio above indicates that Coca-Cola Company as at 2021 is profitable and is able to meet its short term obligations. Net revenue Total revenue refers to the total sales attributed to the production of goods and services. The Coca-Cola financial statement of 2021 indicates that it's making enough revenue from the sale of its products that can enable them to meet its obligations given other expenses in consideration. However, it seems the net revenue of 2021 had increased from that of 2020, citing the possibility of the effect of the covid-19 pandemic that had paralyzed operations in their operations as well as sales. Operating expenses The operating expenses are an organization's running costs, and some are incurred on a diverse basis, such as monthly or daily. The above statement gives a figure of $28,347 for the year ended 2021, while for 2020 was $24,017. The data shows an increase in operating expenses attributed to the increase in selling, general, and administrative expenses incurred within the financial year.

11 Operating income An operating profit is the company's profit after deducting the operating expenses. From the above financial statement, the figure had increased from that of 2020, possibly due to the increase in the selling, general and administrative expenses which were well utilized towards increasing the company's general sales ( Yeo, 2015 ). Net income The net income refers to the gross profit minus the expenses and costs and any other income that wasn't included in the gross income. It also means the amount left over after paying all the debts and fulfilling the expenses. The Coca-Cola net income of 2021 showed an increase from the previous value of 2020, which was key in understanding the increased income attributed to the general sales in the financial year of 2021. The increase in the net income was then attributed to increasing in general activities that led to increased profits. Earnings per share The EPS shows the company's profitability and is also used to value the stocks. It also indicates the portion of corporate profit allocated to each share of the common stock. The EPS had increased from 2020, as seen in the statement, where in 2021, it recorded $2.25 while in 2020, it recorded $1.79. The increase is attributed to an increase in the company earnings led by increased activity levels. Hi-Test Company Question one Equivalent unit for materials for the month;

12 = units completed and transferred to finished good inventory + closing stock for work in process inventory =$23,000 + $7,000 = $30,000 Question two Equivalent unit for conversation for the month; = units completed and transferred to finished good inventory + (40/100 of the closing stock for work in process inventory) = 23,000 + (40/100*7000) = $25,800 Question three Variable cost per equivalent unit of the materials for the month = total cost of direct materials/equivalent unit for materials for the month Total cost of direct materials = 375,000 + 45,000 = 420,000 = 420,000/30,000 = $14 Question four Variable cost per equivalent unit for conversion for the month = total cost of conversion materials/equivalent unit for the conversion for the month

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

13 Total cost of conversion materials = 56,320 + 341,000 = 397,320 =397,320/25,800 = $15.4 Question five Total variable cost for goods transferred out = equivalent unit of production * cost per equivalent unit Direct materials = Units completed and transferred to finished goods inventory * Variable cost per equivalent unit of the materials for the month = 23,000 * 14 =322,000 Conversion = Units completed and transferred to finished goods inventory * Variable cost per equivalent unit for conversion for the month = 23,000 * 15.4 = 354,200 Therefore, total variable cost of goods transferred out = 322,000 + 354,200 =676,200 Question six

14 Total variable cost of ending work in process inventory = equivalent unit of production * cost per equivalent unit Direct materials = Units for closing work in process inventory * Variable cost per equivalent unit of the materials for the month = 7000 * 14 98,000 Conversion = 40% of Units for closing work in process * Variable cost per equivalent unit for conversion for the month = (40/100 * 7000) * 15.4 = 43,120 = 98,000 + 43,120 = 141,120

15 References Welc, J. (2022). Financial statement analysis. In Evaluating Corporate Financial Performance (pp. 131-212). Palgrave Macmillan, Cham. Yeo, J. (2015). Financial statement analysis. Kakani, R. K. (2016). Financial statement analysis.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version