Basics of Accounting
BSF, Univ. of Economics in Wrocław

Lecturer:

dr Wojciech Hasik

Case no. 14.

Hama Company Ltd. is production (manufacture of bricks) & trading enterprise (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 net selling price.

The balance sheet as at 27

th

May 200x is as below:

Assets

As at

27/05/0x

Equity & Liabilities

As at

27/05/0x

A.

Fixed Assets

A.

Owners' Equity

380 000

I

Intangible fixed assets

209 000,-

I

Share equity

300 000,-

II

Tangible fixed assets

209 000,- II.

Reserve capital

80 000,-

1. Machines and equipment

209 000,- B.

Liabilities & provisions for liabil.

112 000,-

B.

Current Assets

283 000,-

III Short term liabilities

I

Inventories

128 000,-

2. To other entities

1. Raw materials

70 000,-

a) credits & loans

70 000,-

2. Work in progress

8 000,-

3. Finished goods

20 000,-

d) trade payables

42 000,-

4. Merchandise

30 000,-

II

Trade receivables

22 000,-

III Short term investments

133 000,-

Shares in other companies

10 000,-

Cash at vault

6 000,-

Cash at bank

117 000,-

Total Assets

492 000,-

Total Equity & Liabilities

492 000,-

The additional information from the trial balance:
 Accumulated depreciation

12 000,-

 Deviation from standard prices of materials (Dt)

2 000,-

 Deviation from standard prices of merchandise

6 000,-

 Deviation from standard cost of finished goods (Dt)

1 000,-

Your task is to:
I. open the ledger accounts concerting additional data from trial balance

II. perform the accounting entries of below transactions:

1. Depreciation write off for current month

2 500,-

2. Settlement of depreciation:

a) office equipment

1 300,-

b) repair & maintenance department

500,-

c) production machinery and equipment

700,-

3. Invoice VAT no. 1/2008 for bricks sold to Obi Ltd. (4000pcs @ 2,5):

a) net value

10 000,-

b) VAT (22%)

2 200,-

c) total

12 200,-

4. Sold bricks were freighted to the client (4 000 pcs @ 1,2/pcs)

…………

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

…………

6. Payroll for current month

15 000,-

7. Settlement of wages into places of incurring:

a) blue collar workers (direct production)

7 500,- (50%)

b) blue collar workers (mid level production supervision)

1 050,- (7%)

c) management staff

4.500,- (30%)

d) maintenance department

1 050,- (7%)

e) marketing staff

900,- (6%)

8. Social insurance paid by employer for current month was computed (15,98%) 2 397,-
9. Settlement of social insurance premium

……………

10. Bank report:

a) interest on a bank loan was paid

1 900,-

Basics of Accounting
BSF, Univ. of Economics in Wrocław

Lecturer:

dr Wojciech Hasik

b) dividend form daughter company was received

5 600,-

c) fine payment was received from a contractor

1 000,-

11. Report from brokerage office on the shares sale:

a) shares value

10 000,-

b) price achieved

13 500,-

c) broker’s commission

200,-

12. Materials were disposed from the warehouse for production site

6 000,-

13. Settlement of cost of materials consumed in production process:

a) direct production consumption

4 200,- (70%)

b) materials for maintenance dep.

780,- (13%)

c) materials for advertisement purposes

960,- (16%)

d) materials consumed for general purposes

60,- (1%)

14. Settlement of deviation from SP of consumed materials to adjust the cost of consumed materials
15. Settlement of deviation from SP of consumed materials to be assigned to places of incurring
16. Costs of maintenance department were calculated and cost of a cost driver was settled (an hour of work

is used as a cost driver – 2.200 were worked):
a) cost of 1 hour

…………

b) for the needs of production department 1 700 hours

…………

c) for general needs of the company

500 hours

…………

17. An old truck was sold: initial value of 12 500,-, accumulated depreciation of 10 000,-
18. Invoice VAT no. 2/2008 for the sold truck:

a) net value

1 500,-

b) VAT 22%

330,-

c) total

1 830,-

19. Finished goods are recognized (30 000 pcs of bricks) at standard of manufacture of 1,2: 36.000,-
20. Invoice VAT no. 3/2008 for building tools sold to Praktiker Ltd (10 sets @ 3 000,-):

a) net value

30 000,-

b) VAT (22%)

6 600,-

c) razem

36 600,-

21. Sold tools were freighted to the client (10 sets@ 2 500,-)

25 000,-

22. The deviation from merchandise standard price was assigned to the value of sold tools ………
23. Indirect costs of manufacture were settled (assigned)

…………

24. The actual cost of manufacture was calculated

…………

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

…………

26. 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) selling costs
g) general and administrative costs

profit/loss on sales

h) other operating expenses
i) other operating revenues

profit/loss on operations (EBIT)

j) financial revenue
k) financial expenses

profit on activities

l) extraordinary profits
m) extraordinary losses

gross profit/loss

n) CIT (19%)

net profit/loss

III. prepare the trial balance and the final balance sheet