l vodafone AU 11:57 pm 100% HC1010 Past Exam 1 Calculate the net profit margin,
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l vodafone AU 11:57 pm 100% HC1010 Past Exam 1 Calculate the net profit margin, asset turnover, earnings per share and debt to total assets ratios for ABC Ltd for the 30 June Year 3. Question 5 (4 marks) Discuss the role that journals, the ledger, debits and credits and the trial balance play in the traditional approach to recording transactions (events) Question 6 In a manufacturing operation, costs can be divided into product costs and period expenses. (6 marks) (a) Explain the difference between product costs and period expenses. (2 marks) (b) Give two examples of costs classfied as product costs. (2 marks) (c) Give two examples of costs classified as period expenses. (2 marks) Question 7 (17 marks) Lirag is a textile manufacturing company in eastern Tennessee. Every year the company prepares a complete set of budgets. The budgeting process begins with information supplied by the Sales and Marketing department The balance in Accounts Receivable at the beginning of the year was $900,000. The marketing department has predicted unit sales to be as follows: January February March 1.480,000 sq. yds. 2.120,000 sq. yds 1,300,000 sq. yds. Selling price for the fabric is $200 per square yard. Cash sales account for 25% of sales. Collections on account (non-cash sales charged to accounts receivable) are received 60% in the month of the sale and 40% in the following month. Required: (a) Prepare a Sales budget for Lirag for the first three months of the year. (Show (b) Prepare a Schedule of Expected Cash Collections for the first three months. (11 totals for the quarter.) (6 marks) marks) Question 8 (12 marks) 3 Open With PrintExplanation / Answer
Question 5
Role of journals: A journal is a record of financial transactions in order by date. It is the book of original entry. There are number of journals in traditional approach to accounting like sales journal, purchases journal, cash receipts journal, etc.
Role of Ledgers: It is called the book of final entry. It a classified and summaried record from journals in form of debits and credits. A ledger shows the balance of an account at a particular date.
Role of Debits and Credits: Debits and Credits are recorded in the ledger while recording the journals. A Debit means increase in assets or expenses or loss oe decrease in liabilities. A credit means increase in liabilities or decrease in assets or revenues or gains.
Role of Trial Balance: A Trial balance is a summary of all the ledger balances on a certain date. A trial balance is used to prepare financial statements and is the first step towards preparing financial statements.
Qusetion 6
a) Product costs are costs necessary to manufacture a product while period costs might not be a part of the manufaturing process. Period costs are generally associated with selling costs. Product costs are also called inventoriable costs because they are costs related to manufacturing process. Product cost is reported as part of cost of goods sold while period costs are reported after gross margin. Period costs are expensed in the period they are incurred while as product costs are assigned to te product they get expenses as the product is sold.
b) Direct Materials and Direct Labor are two examples of product cost
c) General & Administrative expenses like rent, depreciation, office supplies and interest are examples of eriod costs
Question 7
Question 5
Lirag Sales Budget for first quarter Jan Feb Mar Total Units in sq yards (A) 1,480,000 2,120,000 1,300,000 4,900,000 Selling Price per sq yard(B) 2.00 2.00 2.00 2.00 Sales in dollars (A*B) 2,960,000 4,240,000 2,600,000 9,800,000 Lirag Expected Cash Collections Budget for first quarter Jan Feb Mar Total Sales (A) 2,960,000 4,240,000 2,600,000 9,800,000 Collections Cash Sales (25%) (B) 740,000 1,060,000 650,000 2,450,000 Credit Sales (C=A-B) 2,220,000 3,180,000 1,950,000 7,350,000 December (D) 900,000 900,000 January ("E) 1,776,000 1,184,000 2,960,000 February (F) 2,544,000 1,696,000 4,240,000 March (G) 1,560,000 1,560,000 Total (B+D+E+F+G) 3,416,000 4,788,000 3,906,000 12,110,000Related Questions
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