Assignment I1. On March 1, 2020, Tahir Muktar, a famous businessman in Addis, opened a business named “Universal Garage” which is organized as a sole proprietorship. The business is established to render car repair, maintenance and related services for fees. Below are chart of accounts for and selected transactions completed by Universal Garage in March 2020.


a) Chart of accounts

Universal Garage

Chart of Accounts


100 ASSETS

110 CURRENT ASSETS

111 Cash

112 Accounts Receivable

114 Supplies

116 Prepaid Rent

117 Prepaid Insurance

120 PLANT ASSETS

121 Land

123 Machinery

123.1 Accumulated Depreciation-Machinery

125 Office Equipment

0.1 Accumulated Depreciation-Office Equipment


200 LIABILITIES

210 CURRENT LIABILITIES

211 Account Payable

213 Salaries Payable

216 Interest Payable

220 NON-CURRENT LIABILITIES

221 Long-term Bank Loan


300 OWNER'S EQUITY

301 Tahir, Capital

302 Tahir, Drawings

303 Incomes Summary


400 REVENUES

401 Fees Earned

410 Other Income


500 EXPENSES

501 Salary Expenses

502 Supplies Expenses

503 Rent Expenses

504 Insurance Expenses

505 Depreciation Expenses

506 Interest Expenses

510 Miscellaneous Expenses




b) Transactions

Mar 1 Received the following assets from its owner, Tahir:

Cash....................................... Br, 8,300

Supplies ................................. 2,000

Office Equipment................... 10,000

2 Borrowed Br 5,000 from Dashen Bank

3 Paid Br 1,800 for rent on a building leased for business purposes

3 Purchased welding and other repair machinery for Br 3,600 cash

4 Paid Br 200 for a radio advertisement

8 Sold for Br 200 cash an old office equipment with a recorded cost of Br 200

13 Paid weekly salary Br 1,200

16 Received Br 4,400 from services rendered on cash

20 Paid weekly salary Br 1,200

20 Received Br500 royalties for idle repair machinery it leased to other businesses

20 Delivered service on credit, Br 6,000

21 Purchased additional repair machinery on account for Br 2,000 from Sámi-Engineers

23 Received Br 5,000 additional cash investment from its owner

24 Repaid Br 1,000 bank loan and paid Br 100 interest on bank loan

26 Purchased supplies for Br 800 cash

27 Paid Br 100 for customer entertainment and other items

27 Paid weekly salary Br 1,200

31 Paid Br 500 for electricity and other utilities consumed during the month

31 Received Br 4,200 cash from credit customers

31 Paid Tahir Br 1,800 for personal uses


Required:

a) Journalize the above transactions in a two-column journal

b) Post the journal entries to “T” accounts

c) Prepare and complete a worksheet based on the following additional information

i. Cost of supplies remained unconsumed on Mar 31 is Br 900

ii. The amount paid on Mar 3 is for a three-month rent

iii. The amounts of depreciation for machinery and office equipment are estimated to be Br 560 and Br 1,900 respectively

iv. Universal Garage usually pays Br 1,200 for employee's salary every saturday for a six-day work week ended on that day

v. Interest on bank loan accrued but not paid on March 31 total Br 100

d) Prepare financial statements for the month

e) Journalize and post adjusting entries

f) Journalize and post closing entries

g) Prepare post-closing trial balance

Answers

Answer 1
Answer:

Answer:

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A company manufactures hair dryers. It buys some of the components, but it makes the heating element, which it can produce at the rate of 860 per day. Hair dryers are assembled daily, 251 days a year, at a rate of 330 per day. Because of the disparity between the production and usage rates, the heating elements are periodically produced in batches of 2,300 units. a. Approximately how many batches of heating elements are produced annually? (Round your answer to 2 decimal places.) Number of batches
b. If production on a batch begins when there is no inventory of heating elements on hand, how much inventory will be on hand 2 days later? Number of inventory
c.What is the average inventory of elements, assuming each production cycle begins when there are none on hand? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Average inventory
d. The same equipment that is used to make the heating elements could also be used to make a component for another of the firm’s products. That job would require 3 days, including setup. Setup time for making a batch of the heating elements is a half day. Is there enough time to do this job between production of batches of heating elements?

i. No
ii. Yes

Answers

Answer:

(a) 93.85 batches of heating elements are produced annually

(b) 1725

(c) 863

(d) Yes

Explanation:

(a) Daily production rate is 860 units

Annual (251 days) production rate is = 251×860 = 215860 units

In a batch, 2300 units are produced

215860 units are produced in (215860 ÷ 2300) = 93.85 batches

(b) In 251 days, 93.85 batches are produced

In 2 days, (93.85×2)÷251 is produced = 0.75 batch

1 batch = 2300 units

0.75 batch = 0.75×2300=1725 units

(c) 0.75 batch is produced in 2days

1 batch is produced in 2/0.75days

Average= (2300×0.75)÷2= 863

Final answer:

The company produces approximately 93.85 batches of heating elements annually, has an inventory of 1,060 units two days after production, and maintains an average inventory of 1,150 units. Furthermore, there is enough time to produce other products between batches of heating element production.

Explanation:

To solve this problem, we first need to understand the company's production and consumption rates of the heating elements for their hair dryers.

a. The company produces elements at a rate of 860 per day and runs 251 days per year. Thus, they produce around 215,860 elements annually. As they produce elements in batches of 2,300, the number of batches produced annually will be 215,860 divided by 2,300, which is approximately 93.85. So, the company produces about 93.85 batches of heating elements annually.

b. Two days after the production of a batch, the company will have produced 2 * 860 = 1,720 elements but used 2 * 330 = 660, thus having an inventory of 1,060 units.

c. To calculate the average inventory, we take the sum of the maximum and minimum inventory (2,300 and 0, respectively) and divide by 2, leading to an average inventory of 1,150 units.

d. The time between production of batches of heating elements is the total quantity in a batch divided by the net increase per day (860-330). This equals 2,300/(860-330) approximately 4.8 days. Given that the other product takes 3 days to make, including setup, there is enough time to produce it between batches of heating elements.

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If the unemployment rate falls below its long-run level, which policies would be appropriate to stabilize output? a. increase the money supply, increase taxes b. increase the money supply, cut taxes c. decrease the money supply, increase taxes d. decrease the money supply, cut taxes

Answers

Answer:

c. decrease the money supply, increase taxes

Explanation:

Unemployment rate lower than the natural rate of unemployment (long run unemployment), creates inflationary gap in the economy. It requires policies to be contractionary in nature. Hence, money supply should decrease and tax should increase to correct the economy.

A. If Canace Company, with a break-even point at $259,000 of sales, has actual sales of $350,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?Round the percentage to the nearest whole number.1. $
2. %

Answers

Answer:

Margin of safety in dollars is $91,000

Margin of safety as percentage of sales is 26%

Explanation:

Margin of safety can be defined as the amount of output or sales that a business can make before it reaches its breakeven point.

To calculate margin of safety in dollars

Margin of safety= Sales - Breakeven sales

Margin of safety= 350,000- 259,000

Margin of safety= $91,000

To calculate margin of safety as a percentage of sales, we use the following formula.

Margin of safety = (Sales- Breakeven point) ÷ Sales

Margin of safety = (350,000- 259,000)÷ 350,000

Margin of safety= 0.26= 26%

Answer:

1. Margin of Safety(MOS) expressed in dollars =91,000

2. Margin of Safety(MOS) expressed as percentage = 26% (to the nearest whole number)

Explanation:

The MARGIN OF SAFETY is applied as a measure of the difference between the actual sales and break-even sales.

In other words, to find Margin of Safety, you subtract break-even sales from the actual sales.

MOS is used to determine at which level sales can drop before a business incurs losses. It is a tool by which actual or budgeted sales may be decreased without resulting in any loss.

1. Formula for Margin of Safety(in dollars):

Margin of Safety(in dollars) = Actual/Budgeted Sales ➖ Break-even Sales

Where:

Actual Sales = $350,000

Break-even Sales = $259,000

➡ Margin of Safety(in dollars) = $350,000 ➖ $259,000 = 91,000(ans)

2. Formula for Margin of Safety (expressed as a percentage) = [(Actual/Budgeted Sales ➖ Break-even Sales) ➗ Actual/Budgeted Sales] ✖ 100%

Where:

Actual Sales = $350,000

Break-even Sales = $259,000

➡ Margin of Safety (in percentage) = [($350,000 ➖ $259,000) ➗ $350,000] ✖ 100%

= ($91,000 ➗ $350,000) ✖ 100%

= 0.26 ✖ 100% = 26%(ans).

The average annual return on the S&P 500 Index from 1986 to 1995 was 15.8 percent. The average annual T-bill yield during the same period was 5.6 percent. What was the market risk premium during these ten years?

Answers

Answer:

10.20%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

where.

The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.

So, the market risk premium would be

= Average annual return - average annual t-bill yield

= 15.8% - 5.6%

= 10.20%

Global strategic planning is a primary function of a company's managers, and the process of strategic planning provides a formal structure for undertaking this process. Companies are confronting a set of environmental forces that are increasingly complex, global, and subject to rapid change. In response, many international firms have found it necessary to institute formal global strategic planning to provide a means for top management to identify opportunities and threats from all over the world, formulate strategies to handle them, and stipulate how to finance and manage the implementation of these strategies? Drag the following stat ogic pianning steps into the ordor in which they typicaliy occur, from first to last.1. Quanbry goals 2. Formulatc strategic3. External analysis4. Set ojectives 5. Intemal Analysis 6. Tactical planning 7. Define busines

Answers

1. External analysis

2. Internal analysis

3. Define business

4. Set objectives

5. Quantify goals

6. Formulate strategies

7. Tactical planning

The following information should be considered:

Global Strategic Planning happens in the following 7 stages;

  • External Analysis : Here the  business's external Environment should be scanned.
  • Internal Analysis: In this, it shows the strengths, weakness, it's customers and value chain
  • Define Business: Reason for existence, objective, aims, etc
  • Set Objectives: Here the company should set objectives for what they want the company to do in the global Environment.
  • QuantifyGoals: Here the company attempts to quantify
  • Formulate Strategie: strategies for implement it's goals should then be formulated.
  • TacticalPlanning: The plans that will ensure the success of the strategic goals are then made.

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Answer:

1. External analysis

2. Internal analysis

3. Define business

4. Set objectives

5. Quantify goals

6. Formulate strategies

7. Tactical planning

Explanation:

Global Strategic Planning happens in the following 7 stages;

1. External Analysis

Scan the business's external Environment and identify the opportunities presented or the threats posed by outside forces to the company.

2. Internal Analysis

Then it is time to look into the company and find out it's strengths, weakness, it's customers and value chain,  and what sets it apart from others. In other words, what is the Differentiation factor that it has over other companies.

3. Define Business

What is the company's reason for being in existence. What are the objectives and aims of the business and who is it targeting. Why is it targeting them. This is where those Important questions are asked so that one might know why the business exists.

4. Set Objectives.

Here the company should set objectives for what they want the company to do in the global Environment. How the company should be positioned and what the strategic goals are.

5. Quantify Goals

Here the company attempts to quantify or properly express the goals that they hope to achieve in the globe so make it less complicated.

6. Formulate Strategies

Based on what the company has researched and analyzed about itself and the external Environment, strategies for implement it's goals should then be formulated.

7. Tactical Planning

After the Strategic goals have been made, the Tactical Planning is next. This is when the plans that will ensure the success of the strategic goals are then made. These are more short term in nature unlike the strategies that are long term.

In 2017, Oriole Corporation reported net income of $1,004,700. It declared and paid preferred stock dividends of $278,600. During 2017, Oriole had a weighted average of 200,700 common shares outstanding. Compute Oriole’s 2017 earnings per share.

Answers

Answer:

$3.62

Explanation:

The dividend distributed to common share = total net income - dividend for preferred stock

=  $1,004,700 -  $278,600

=  $726,100

Earnings per share (EPS) = The dividend distributed to common share / common shares outstanding

= $726,100/ 200700

= $3.62