Company Autumn was incorporated on 1 April 2023, with a cash capital contribution of $50,000,000. Company markets a single product. Following events also occurred during April: - Stock totalling $1,500,000 + VAT was purchased on credit from suppliers. - Stock costing $1,300,000 was sold in cash for $2,000,000 + VAT. - A quarter of the month's sales were returned by customers in perfect condition and the company reimbursed them. It issued the corresponding credit notes. Assume that the cost of the returned goods is one quarter of the cost of the goods sold. - The company provides a warranty to its customers for one year. The company makes a provision for warranty at the end of April of 5 per cent of the net income from returns. - The company had salary expenses of $70,000 and overhead expenses of $9,000 + VAT. Assume that all were paid in cash during April. - The company makes the necessary journal entries on 30 April to recognize PPM (called monthly provisional payments) and the adjustment to the VAT accounts, both of which will be paid on 20 May if applicable. The PPM rate (called monthly provisional payments) it applies is 1% on the sales revenue for the month. Following events occurred during May: - Stock totaling $3,000,000 + VAT was purchased on credit from suppliers. The unit cost was the same as the units purchased in April. - Stock for $5,000,000 + VAT, which had cost $3,300,000, was sold for cash. - A customer returned a defective purchase under warranty. The company issued a credit note, refunded the money and disposed of the stock, considering this disposal to be unusual. The purchase had been for $500,000 + VAT and the cost of sales was $330,000. - The company provides a warranty to its customers for one year. The company makes a provision for warranty at the end of May of 5% of the income net of returns. - The company had salary expenses of $70,000 and overhead expenses of $9,000 + VAT. Assume that all were paid in cash during May. - On 20 May it pays VAT and PPM (called monthly provisional payments) for the month of April if applicable. - The company makes the necessary journal entries on 30 May to recognize the PPM (monthly provisional payments) and the adjustment to the VAT accounts, as both will be paid on 20 June if applicable. PPM rate (monthly provisional payments) applied is 1% on the sales revenue for the month. Assume VAT at 19% and an income tax rate of 27%. YOU ARE ASKED TO: 1) Produce the journal for April 2023. 2) Present an income statement as of April 30, 2023. 3) Produce the journal for May 2023.
Company Autumn was incorporated on 1 April 2023, with a cash capital contribution of $50,000,000. Company markets a single product.
Following events also occurred during April:
- Stock totalling $1,500,000 + VAT was purchased on credit from suppliers.
- Stock costing $1,300,000 was sold in cash for $2,000,000 + VAT.
- A quarter of the month's sales were returned by customers in perfect condition and the company reimbursed them. It issued the corresponding credit notes. Assume that the cost of the returned goods is one quarter of the cost of the goods sold.
- The company provides a warranty to its customers for one year. The company makes a provision for warranty at the end of April of 5 per cent of the net income from returns.
- The company had salary expenses of $70,000 and overhead expenses of $9,000 + VAT. Assume that all were paid in cash during April.
- The company makes the necessary
Following events occurred during May:
- Stock totaling $3,000,000 + VAT was purchased on credit from suppliers. The unit cost was the same as the units purchased in April.
- Stock for $5,000,000 + VAT, which had cost $3,300,000, was sold for cash.
- A customer returned a defective purchase under warranty. The company issued a credit note, refunded the money and disposed of the stock, considering this disposal to be unusual. The purchase had been for $500,000 + VAT and the cost of sales was $330,000.
- The company provides a warranty to its customers for one year. The company makes a provision for warranty at the end of May of 5% of the income net of returns.
- The company had salary expenses of $70,000 and overhead expenses of $9,000 + VAT. Assume that all were paid in cash during May.
- On 20 May it pays VAT and PPM (called monthly provisional payments) for the month of April if applicable.
- The company makes the necessary journal entries on 30 May to recognize the PPM (monthly provisional payments) and the adjustment to the VAT accounts, as both will be paid on 20 June if applicable. PPM rate (monthly provisional payments) applied is 1% on the sales revenue for the month.
Assume VAT at 19% and an income tax rate of 27%.
YOU ARE ASKED TO:
1) Produce the journal for April 2023.
2) Present an income statement as of April 30, 2023.
3) Produce the journal for May 2023.
Step by step
Solved in 2 steps
