The industrial company "ZONES S.A." manufactures leather belts upon request of its customers. In the last quarter of 2012 it was fully engaged in the execution of order 135. The order was for the construction of 1,000 zones. According to the technical specifications set by the customer, each belt requires 200 grams of leather and 50 grams of metal parts. Additional information shall be given: At the beginning of the quarter the company had no initial stock of raw materials. Both leather and metal components are considered as raw materials. The purchase was made on credit of 300 kg of leather for € 4,500 and 100 kg of metal parts for € 6,000. The net (after deductions) hourly wage of the workers is equal to € 8 and for the completion of the order 135 spent 2,000 hours of direct work. Deductions represent 20% and employers' contributions 10% of the nominal hourly wage. The quarter's salaries were paid normally. They were paid for rents of €3,000 and for factory premiums of €5,000. Rents and insurance premiums are the only fixed costs in the quarter. The generally Industrial expenses are Attributed with base he height of labour paid and with an imputation rate of 125%. The order was delivered to the customer € 55.000. The company settles the allocation difference by apportioning it to the accounts Production in Progress, Finished Goods and Cost of Sales at a ratio of 25%, 25% and 50% respectively. Provide the calendar entries from the purchase of raw materials up to and including the determination of the gross result of the first quarter of 2012, taking into account the settlement of the allocation difference of general industrial expenses.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The industrial company "ZONES S.A." manufactures leather belts upon request of its customers. In the last quarter of 2012 it was fully engaged in the execution of order 135. The order was for the construction of 1,000 zones. According to the technical specifications set by the customer, each belt requires 200 grams of leather and 50 grams of metal parts. Additional information shall be given:

At the beginning of the quarter the company had no initial stock of raw materials. Both leather and metal components are considered as raw materials.
The purchase was made on credit of 300 kg of leather for € 4,500 and 100 kg of metal parts for € 6,000.
The net (after deductions) hourly wage of the workers is equal to € 8 and for the completion of the order 135 spent 2,000 hours of direct work. Deductions represent 20% and employers' contributions 10% of the nominal hourly wage. The quarter's salaries were paid normally.
They were paid for rents of €3,000 and for factory premiums of €5,000. Rents and insurance premiums are the only fixed costs in the quarter.
The generally Industrial expenses are Attributed with base he height of labour paid and with an imputation rate of 125%.
The order was delivered to the customer € 55.000.
The company settles the allocation difference by apportioning it to the accounts Production in Progress, Finished Goods and Cost of Sales at a ratio of 25%, 25% and 50% respectively.

Provide the calendar entries from the purchase of raw materials up to and including the determination of the gross result of the first quarter of 2012, taking into account the settlement of the allocation difference of general industrial expenses.

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