Assessment Cover Sheet

Assessment Title

Assessment 2 group report

Programme Title:

BILM

Course No.:

BSB 5005

Course Title:

Introduction to Accounting

Student Name:

Majeda Ali Majed Habb AlShaikh Yusuf

Student ID:

20141171

Tutor:

Saeeda Arian

6th June 2015

Due Date:

6th June 2015

Date submitted:

By submitting this assessment for marking, either electronically or as

hard copy, I confirm the following:
This assignment is my own work

Any information used has been properly referenced.

I understand that a copy of my work may be used for moderation.
I have kept a copy of this assignment
Do not write below this line. For Polytechnic use only.

Assessor:
Grade/Mark:
Comments:

1.0 PART A:
Question A:

Date of Marking:

H. J. Heinz Co.
Journal entries
31st of May 2014
DR
123-

4-

56789101112-

Cash

CR
40000

Owner's capital
NO ENTRY
NO ENTRY
Warehouse rental
expenses
Cash
Furniture and
Equipment
Cash
Account payable
Insurance expense
Cash
Office supplier
Cash
Office supplier
Account payable
Cash
Account receivable
Revenue
Account payable
Cash
Cash
Account
receivable
Utility expenses
Account payable
Employee's salaries
expenses
Cash

40000

24000
24000
30000
10000
20000
1800
1800
500
500
1500
1500
8000
12000
20000
400
400
3000
3000
350
350
6100
6100

Question B:

1234578910-

Cash
owner's capital

40000

Revenue 8000

8000

Account Receivable

3000

balance b/d

5100
0
8200

Warehouse rental Expenses

24000

Furniture and Equipment

Insurance Expenses
Office Supplier

10000

Account Payable
Employee's Salaries
balance c/d

1800
500
400
6100
8200
51000

79-

Revenue

Balance b/d

368-

Cash
balance c/d

Account Receivable
12000 Cash
1200
0
9000

Balance c/d

Cash
Account payable
balance b/d

1balance c/d

10-

Cash
balance b/d

4-

Cash
balance b/d

9000
12000

Account Payable
Furniture and Equipment
Office Supplier
400
21100

2150
0

56-

3000

balance b/d

Office Supplier
500
1500
2000 balance c/d
2000

Owner's Capital
Cash
40000
40000 balance b/d

20000
1500

21500
21100

2000
2000

40000
40000

Employee's salaries Expenses

6100
balance c/d
6100

6100
61000

Insurance Expense
1800
balance c/d
1800

1800
1800

Revenue

7-

Cash
Account receivable
balance c/d

2balance c/d

4-

Cash
account payable
balance b/d

utility payable
11-

11-

Balance b/d

balance c/d

20000
20000

balance b/d

Warehouse Rental Expenses

Cash
24000
balance b/d

8000
12000
20000
20000

24000
24000

Furniture and Equipment

10000
20000
balance c/d
30000

30000
30000

Utility expense
350
350
balance c/d
350

350
350

Utility Payable
Utility Expense
350
350
balance b/d

350
350
350

Question C:
H. J. Heinz Co.
Trial Balance
31st of May 2014
Cash

8200
4000
0
2000
0

Capital
Revenue
Employee's salaries Expenses

6100

Insurance Expenses
office supplier
utility payable
Warehouse rental Expenses
account Receivable

1800
2000
350
2400
0
9000
2110
0

account payable
Furniture and Equipment
utility expense
Total

3000
0
350
8145
0

8145
0

Question D:
H. J. Heinz Co.
Income Statement
31st of May 2014
2000
0

Sales
Less:

Expenses
Employee's salaries expenses
Insurance expenses
utility expenses
Warehouse expenses

6100
1800
350
2400
0
3225
0
1225
0

Total Expenses
Operating Profit ( Net Loss)

Question E:
H. J. Heinz Co.
Statement of Owner's Equity
For the month ended 31st of May 2014
4000
Owner's Capital, May 1st 2014
0
1225
Net income , May 31 2014
0

Owner's Capital, May 31st 2014

Question F:

277
50

H. J. Heinz Co.
Balance Sheet
For the month ended may 31st 2014
Non-Current Assets
Furniture and equipment
Current Assets
Cash
Account receivable
Supplier
Total assets

30000

8200
9000
2000
49200

Owner's Equity

27750

Current liability
Account payable
Utility Payable

21100
350

Total equity and liability

49200

Part B:
VARIABLE
Wood used in
production of furniture
Fuel used in delivery
trucks
Screws used in the
production of furniture
Sales commissions
Hourly wages of
furniture craftsmen

FIXED
Straight-line
depreciation on factory
building
Sales staff salaries

MIXED
Utilities expense
Telephone bill

Property taxes
Insurance on buildings
Salaries of factory
supervisors

Part C:
One of the largest business frauds ever perpetrated have involved the misstatement
of inventory Leslie Fay.
Leslie Fay is an apparel Company that was founded at 1947 (vintagefashionguild,
2010), In January 1993 Lesley fay revealed that Donald Kenia and other employees
has been doctored on the company books to inflate the company profit. In the end of
1980s and beginning of 1990s, the economy began to decline and the recession
caused the consumers to limit their discretionary expenditures including buying new
clothes. . After John Operant took over the company, the profits started to climb up
sharply even though the market for womens clothing was going downhill due to the
recession that was caused during the 1980s through the 1990s. . In the early 1993, a
major accounting fraud was exposed, and detectives determined that Leslie Fays
earnings were overstated by $80million from 1990 1992. After the investigation and
after analyzing the financial statements, it was found that there was a huge
continuous increase of net income from 19871991. Afterwards, it was stated Kenia is
responsible for scheming the fraud and manipulating other work members. Together

with Kenia, the auditor BDO Seaman was fired of his job as a penalty for conducting an
unreliable and incomplete audit (Samar, 2013) .

Bibliography
vintagefashionguild. (2010, 7 13). Retrieved 5 20, 2015, from vintagefashionguild:
http://vintagefashionguild.org/label-resource/fay-leslie/
Samar, N. M. (2013, 8 13). scribd. Retrieved 5 20, 2015, from scribd:
http://www.scribd.com/doc/159996709/Leslie-Fay#scribd

Part D:
Good sold fixed
Selling fixed
Administrative fixed

= 200,000
= 162,400
= 90,000

200,000 + 162,400 + 90,000 = 425,400 Fixed cost

75 % good sold variable

42% selling expenses variable
40% administrative expenses variable

800,000 = %75 600,000

280,000 42% = 117,600
150,000 40% = 60,000

60,000+ 117,600 + 60,000 = 777600

777600 240,000 = 3.24 variable per unit

Selling price per unit = 120,000/ 240,000 = 5$

Question A:
Breakeven point per unit:
452,400 (5-3.24) =257,045.45 unit
Breakeven point in dollars:
452,400 (1200, 000 777600) / 1200,000 = 452,400 0.352 = 1,285227.27

Question B:
240,000 0.25 = 60000
Cost of goods sold: 800,000 + 60000 = 860,000

240, 0000 1.25 = 300,000

Sales revenue: 300,000 5.25 = 1575000
Gross profit: 1575000 860,000 = 715000
280,000 0.42 (variable) = 117600/ 240,000 300,000 = 147,000
280,000 117,600 = 162,400
Selling: 147,000 + 162,400 = 309,400

150,000 0.4 (variable) = (60,000/240,000) 300,000 = 75000

150,000 60,000 = 90,000
Administrative : 90,000 + 75,000 = 165,000
Total operation expenses: 309,400+ 165,000 = 474,400
Net profit: 715,000 474,400 = 240,600
Since the profit increased and became 240,600
Breakeven point in dollars:
452,400/ (1,575,000 882,000) 1,575,000 =
452,400 / 0.44 = 1,028181.818 $
Question C:
0.49 + 0.59 = 1.08
Selling variable cost: 1.08 240,000 = 259,200
259,200 + 162,400 = 421,600
New total revenue: 240,000 4.75 = 1,140,000
Fixed selling expense: 162,400 + 40,000 = 202,400
Total selling expense: 259,200 + 202,400 = 461,600
240,000 1.6 = 384,000
Revenue 384,000 4.75 = 1,824,000
2.5 384,000 = 960,000
Cost of goods sold: 960,000 + 200,000 = 1,160,000

Gross profit: 1,824,000 116,000 = 664,000

664,000 461,600 = 202,400
[60,000 240,000] 384,000 = 96,000
Administrative : 96,000 + 90,000 = 186,000
Net profit: 202,400 186,000 = 16,400
Breakeven point in dollars:
492,400/ (1,824,000 1315, 200) 1,824,000 = 492,400 /0.28 = 1,758571.429
Question D:
There will be slight profit of 16,400$
Break-even in partnership 1,758571.429
Therefore, We should accept Lisas plan [B] because the higher net profit and the
lower Breakeven point.

Part E:
Analysis part 1:
Januar
y
5
50.00

Februa
ry
6
00.00

March
8
00.00

April
9
00.00

May
9
75.00

June
95
0.00

Total Budgeted Sales in

$
Cash received 55% in
same month

95.00
52,25
0.00
28,73
7.50

95.00
57,00
0.00
31,35
0.00

95.00
76,00
0.00
41,80
0.00

95.00
85,50
0.00
47,02
5.00

95.00
92,62
5.00
50,94
3.75

95.00
90,25
0.00
49,63
7.50

remaining cash in next

month

23,51
2.50

25,65
0.00

34,20
0.00

38,47
5.00

41,68
1.25

40,61
2.50

25.00
13,75
0.00

25.00
15,00
0.00

25.00
20,00
0.00

25.00
22,50
0.00

25.00
24,37
5.00

25.00
23,75
0.00

8,25
0.00

9,00
0.00

12,00
0.00

13,50
0.00

14,62
5.00

14,25
0.00

5,50
0.00

6,00
0.00

8,00
0.00

9,00
0.00

9,75
0.00

9,50
0.00
2
1.00

Expected Sales in Unit

Budgeting Selling Price

Material cost per unit

total material cost
Cost will be paid in
month of purchase
60%
Remaining cost to be
paid
Labor cost per unit

21.00

21.00

21.00

21.00

21.00

11,55
0.00
12,00
0.00
1,00
0.00
10,00
0.00
8
50.00

12,60
0.00
12,00
0.00
1,00
0.00
10,00
0.00
8
50.00

16,80
0.00
12,00
0.00
1,00
0.00
10,00
0.00
8
50.00

8
00.00

August
6
50.00

Septem
ber
60
0.00

Octobe
r
5
00.00

Novem
ber
70
0.00

Decem
ber
40
0.00

8,425.00

95.00
76,0
00.00

95.00
61,7
50.00

95.00
57,00
0.00

95.00
47,50
0.00

95.00
66,500
.00

95.00
38,00
0.00

800,375.0
0

41,8
00.00

33,9
62.50

31,35
0.00

26,12
5.00

36,575
.00

20,90
0.00

34,2
00.00

27,7
87.50

25,65
0.00

21,37
5.00

29,925
.00

17,10
0.00

25.00
20,0
00.00

25.00
16,2
50.00

25.00
15,00
0.00

25.00
12,50
0.00

25.00
17,500
.00

25.00
10,00
0.00

12,0
00.00

9,7
50.00

9,00
0.00

7,50
0.00

10,500
.00

6,00
0.00

8,0
00.00

6,5
00.00

5,00
0.00

21.00
16,8
00.00
12,0
00.00
1,0
00.00
10,0
00.00
8
50.00

21.00
13,6
50.00
12,0
00.00
1,0
00.00
10,0
00.00
8
50.00

6,00
0.00
2
1.00
12,60
0.00
12,00
0.00
1,00
0.00
10,00
0.00
85
0.00

7,00
0.00
2
1.00
14,700
.00
12,000
.00
1,00
0.00
10,000
.00
85
0.00

4,00
0.00
2
1.00
8,40
0.00
12,00
0.00
1,00
0.00
10,00
0.00
85
0.00

Total Labor cost

ProdOH cost
Prod Depr.
Non-Prod OH cost
Non-Prod Depr.

18,90
0.00
12,00
0.00
1,00
0.00
10,00
0.00
8
50.00

20,47
5.00
12,00
0.00
1,00
0.00
10,00
0.00
8
50.00

19,95
0.00
12,00
0.00
1,00
0.00
10,00
0.00
85
0.00

Analysis part 2:

July
Expected Sales
in Unit
Budgeting
Selling Price
Total Budgeted
Sales in $

Cash received
55% in same
month
remaining cash
in next month
Material cost per
unit
total material
cost
Cost will be paid
in month of
purchase 60%
Remaining cost
to be paid
Labor cost per
unit
Total Labor cost
ProdOH cost
Prod Depr.
Non-Prod OH
cost
Non-Prod Depr.

Question 1: Cash Budget Per Month

21.00
10,50
0.00
12,00
0.00
1,00
0.00
10,00
0.00
8
50.00

210,625.0
0

176,925.0
0
144,000.0
0
120,000.0
0

January

Februar
y

March

April

May

June

Cash Received

28,737.
50

41,800.0
0

60,150.0
0

84,575.00

111,593.75

136,812.50

Material Cost
Paid

8,250.00

14,500.0
0

18,000.0
0

21,500.00

23,625.00

24,000.00

11,550.0
0

12,600.0
0

16,800.0
0

18,900.00

20,475.00

19,950.00

12,000.00

12,000.00

10,000.00

10,000.00

Labor Cost
Paid
Production OH

Actual 12,000.0
Variance
Budgeted
12,000.0
12,000.0
12,000.00
7,
(4
8,42
0
0
0
Units
980
45)
5
Non Prod OH
742,140. 10,000.0
(58,235.0
10,000.0
10,000.0
10,000.00
800,375.00
Revenues
00
0) 0
0
0
93
(2.
95.0
Ending Cash
SP
.00
00)
0
(13,062. (7,300.0 3,350.00
22,175.00
219,450.
(8,825.0
50)
0)
210,625.00
Material Cost
00
0)
175,560.
1,365.
176,925.00
Labor Cost
00
00
347,130
(65,695.0
412,825.0
CM
.00
0)
0
Question 2: Variance
analysis
141,000.
3,000.
144,000.00
Production OH
00
00
Non-Production
114,000.
6,000.
120,000.00
OH
00
00
92,130
(56,695.0
148,825.0
Net Income
.00
0)
0
Advers
e
Favora
ble

45,493.75

Question 3: Variance reconciliation

Budgeted Net Income
* Add Fav
Labor Cost Variance
Prod OH Variance
Non Prod OH Variance

148,825.00

1,365.00
3,000.00
6,000.00
10,365.00

* Less Adv
Revenues Variance
Material Cost Variance
Actual Net Income

(58,235.
00)
(8,825.0
0)
(67,060.00)
92,130.00

70,862.50

Question 4:
The variances are mainly coming from the sales revenues, which was budgeted at
$95. While the actual is $93 due to the high competition. Moreover, the material cost
was wrongly estimated due to the changes in prices of the materials actually.