Basics of Accounting
BSF, Univ. of Economics in Wrocław

Lecturer:

dr Wojciech Hasik

Case no. 13.

X Company is bricks and tails producer, it is also trading company (retail of building tools. Its
accounting policies are as follows:

costs are registered initially by kind and subsequently by function,
materials are registered at standard price and finished goods at standard cost,
merchandise are registered at selling price.

The chosen accounts had the following balances as of April 26

th

200x.:

Cash at bank

78 000,-

Trade receivables

35 000,-

Trade payables

45 000,-

Tangible fixed assets

120 000,-

Accumulated depreciation

20 000,-

Merchandise (at selling price)

15 000,-

Deviation from standard price of merchandise

1 000,-

Depreciation

4 700,-

Social insurance and benefits

5 000,-

Wages

10 000,-

Costs by kind settlement

19 700,-

Costs of basic activity

4 000,-

Direct costs of basic activity.

3 000,-

Costs of transportation dep.

5 000,-

General &administrative costs 7 700,-

I.

perform the accounting entries of below transactions:

1. Bank report:

a) interests from bank deposit

780,-

b) fine for environmental pollution was paid

1 000,-

c) interest on a bank loan was paid

3 000,-

2. A production machine was sold: initial value of 7 500,-, accumulated depreciation of 4 000,-
3. Invoice VAT no. 200/2007 for machine sold to Rokpol Ltd:

a) net value

4 500,-

b) VAT 22%

990,-

c) total

5 490,-

4. A donation was received in the form of computer network - market value of

5 500,-

5. As a result of fire in the warehouse the merchandise were demolished (building tools 4pcs @

2 500,-)

10 000,-

6. Settlement of deviation from selling price of demolished merchandise

…………

7. Finished goods are recognized (10 000 pcs of bricks) at standard of manufacture of 1,-: 10.000,-
8. The time-barred (out dated)receivables were written off

3 500,-

9. The time-barred (out dated) trade payables were written off

18 200,-

10. A compensation for demolished merchandise was received from insurer

6 700,-

11. Costs of transportation department were calculated and cost of 1km was settled (distance of 250km

was made):
a) cost of 1 km

…………

b) for the needs of production department 160 t/km

…………

c) for general needs of the company

90 t/km

…………

12. Indirect costs of manufacture were settled (assigned)

…………

13. The actual cost of manufacture was calculated

…………

14. The deviation from standard cost of manufacture was calculated and assigned

…………

15. Invoice VAT no. 201/2007 for bricks donated to Charitable Foundation (4000pcs @ 1,-):

a) net value

4 000,-

b) VAT 22%

880,-

c) total

4 880,-

16. The donated bricks were freighted to Charitable Foundation

4 000,-

17. The deviation from SC was assigned to the value of donated bricks

…………

18. Invoice VAT no. 202/2007 for bricks sold to Dachbud Plc. (5000pcs @ 1,5):

a) net value

7 500,-

b) VAT (22%)

1 650,-

c) total

9 150,-

19. Sold bricks were freighted to the client (5 000 pcs @ …./szt.)

…………

20. The deviation from SC of finished goods was assigned to the value of sold bricks

…………

21. Invoice VAT no. 203/2007 for building tools sold to Stalex Sp. z o.o. (2 pcs @ 2 500,-):

a) net value

5 000,-

b) VAT (22%)

1 100,-

c) razem

6 100,-

22. Sold tools were freighted to the client (2 pcs @ 2 500,-)

5 000,-

23. The deviation from merchandise standard price was assigned to the value of sold tools ………
24. The interest on a loan granted to other company were paid

1 300,-

25. The adjusting entries at the end of financial period were made in order to prepare P&L account:

a) costs by kind treatment
b) revenue from sales of merchandise
c) revenue from sales of products
d) value of merchandise sold
e) cost of sales (cost of manufacture of products sold)

gross profit/loss on sales

f) general and administrative costs

profit/loss on sales

g) other operating expenses
h) other operating revenues

profit/loss on operations (EBIT)

i) financial revenue
j) financial expenses

profit on activities

k) extraordinary profits
l) extraordinary losses

gross profit/loss

m) CIT (19%)

net profit/loss