CLASS 6 & 7- FINAL EXAM CASE QUESTION PREPARATION: 2012
Case One: (Case: Muriel’s Murals)
1.
At end of April 2013, after paying several bills, Missoni complete following manual journal entries to record the transactions.
Date
April 30
April 30
April 30
April 30
Reference
(cheque#)
Rent (#434)
Accounts
Expenses
GST
Bank
Hydro(#435) Expenses
GST
Bank
Telephone(#436) Expenses
Printer
Cable(#437)
GST
Bank
Expenses
GST
Bank
Debit
800
40
100
5
90
4.5
40
2
Credit
840
105
94.5
42 a) Manually show the detailed journal entries that record these transactions as they would appear in Simply Accounting journal report. (Hint: Display General Journal Report) b) How is the simply accounting method of entering journal transactions different from the manual accounting procedures? c) What are the advantages of using simply accounting?
2.
In May 7, 2013, you have complete the following purchase in the General Journal
Purchase Invoice (Source Code #DE-67113) Date: May 7, 2013
From Devon Equipment Co., $300 for power tools, plus $15 GST. Invoice Total $315. Term: Net
30 days.
After posting the above transaction, you realized that the equipment was rented instead of purchased, should be charged to equipment rental expenses account.
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CLASS 6 & 7- FINAL EXAM CASE QUESTION PREPARATION: 2012 a) Make the correction necessary to reflect this expense accurately. ( Please describe the procedure in details) b) Why is it important to make the correction? What if another expense account were statement? Would it still be necessary to make the correction? Why?
Case Two (Case: Air Care)
1.
For one of the regular customer, a credit sale of $200 was recorded with the usual default tax
Code GP12%. Total Invoice amount was $224.
However, the customer had been told that $200 would be inclusive of taxes- Tax Code IN should have been used. Therefore, the customer was overcharged by 12%.
The error was not noticed until after the customer had made the full payment $200 for the overcharged amount. a) What options does Air care have to correct this error if the payment has not yet been recorded? b) What options does Air care have to correct this error if the payment has been recorded? c) Why might a business choose to set up customer records for all customers, including cash or one-time customers? Do the same argument apply to setting up supplier record
2.
When a customer returns merchandise, the refund is issued by the same method as the payment- Credit Card Purchase refunded by crediting the credit card account; Cash Purchase was refunded in cash. a) When customer pays by cheque, how can you enter the refund by cheque in Simply
Accounting? b) Can the transaction be completed in the sales journal? Why or Why not?
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CLASS 6 & 7- FINAL EXAM CASE QUESTION PREPARATION: 2012
Case Three: (Case: Adrienne Aesthetics)
1.
Exam the sale of the gift package and determine how successful they have been relative to other items. a) What information should Adrienne Aesthetics use in deciding whether to continue selling these items? b) How is the decision to continue providing a service different from the decision to carry inventory item? Why might a store continue to sell inventory items, or provide a service, even if they were not selling well?
2.
Adrienne Kosh wants to continue providing incentives to regular customers with some form of discount. a) She would like to simplify her records by choosing between preferred customer prices and discounts for early payment. How do these pricing strategies differ? b) What are the advantages of one over the other for the business? c) What are the advantages of one over other for the customer?
3.
At the end of Feb, Adrienne Kosh wants to clear the inventory of products that are close to their expiry dates. Therefore, for all these products, she is offering 20% discount and no taxes on the sales price.
Describe the accounting procedure for entering sales transactions for the reduced price merchandise. Remember that although the customer pay no tax, the store is still requires paying sales taxes to provincial and federal government.
4.
When Kosh is purchasing new inventory for her upcoming busy months, she realizes the several products will be available only at significantly increased prices. This means that her own prices will have to increase to maintain her profit margin. She knows that with average cost method he set up, lower cost item still instock will be combined with new higher priced inventory in determining cost. She prefers to use FIFO method to assess the cost of goods sold.
Describe how she can modify her accounts and inventory ledgers so that she can use FIFO COST calculation method. (Hint: Look at settings for the inventory & service module)
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CLASS 6 & 7- FINAL EXAM CASE QUESTION PREPARATION: 2012
5.
Adrienne Aesthetics used following merchandise in salon to providing services to customer.
Item #
CL02
CL03
CL05
FC01
FC02
Description
Cleaning milk 225ml
Eye Contour Smoothing Cream 30ml
Mask: Herb 100ml
Blush 8g
Concealed 15ml
Quantities
2
2
2
2
2
FC11 Powder: Pressed 15g 4 a) Create an adjustment journal entry for these item, Use an appropriate account for this transaction to replace the default inventory loss account b) Record the PST liability for these items as a journal transactions c) Not all the products were fully used at the end of period. How will you make the adjustment to write off only the merchandise that was fully used?
6.
Adrienne Aesthetics has introduced gift certificates valued at $50 that can be redeemed for products or services. a) How would you record the sale of these certificates? b) When the certificates are redeemed for products or services, how would you record the sales?
7.
Adrienne Aesthetics is adding five types of anti-aging products to its inventory line and wants to set up a separate inventory category for these new items. Some of the creams and lotions that are already in inventory ledger should be part of new category- Anti-aging Products. a) Advise Adrienne Kosh on how to make this inventory change.
8.
The item assembly journal allows you to combine inventory items to build or assemble another product or bundle them as a package. Services cannot be assembled or combined in this way-
They are not accessible in journal because no costs are associate with them. b) How can a Business that offers only services bundle these services and offer them at a different price from the total of individual service prices?
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CLASS 6 & 7- FINAL EXAM CASE QUESTION PREPARATION: 2012
CASE FOUR ( Case: Andersson Chiropractic Clinic)
1.
Entering a purchase with deposit requires a Purchase Journal Entry together with a separate payment Journal Entry together. a) Does a sale with a down payment require separate Sales Journal and Receipts Journal
Entries? Why or Why not ( Hint: You may want to try to enter the transaction in Sales
JOURNAL to observe how the software treats the information)
2.
One of Andersson’s clients will not be following through with an sales order after paying a deposit. Andersson wants to return the deposit to the client. a) How can she enter this refund if client pays in cash? b) If client write a cheque, how can she enter this refund? c) what journal should she use and what journal entry or entries will result from the transactions?
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CLASS 6 & 7- FINAL EXAM CASE QUESTION PREPARATION: 2012
CASE FIVE (Case: Maple Leaf Rags)
1.
Maple Leaf Rags would like to keep track of the sales for each type of credit card sales without sorting through all the sales invoices manually. At present, there is a single account for all these transactions. Owner want to determine whether to continue to pay the fees attached to different kinds of cards. a) How can the owner set up the receivable ledger and credit cards to track this information? b) Why might he accept credit card payment even if they are relatively more costly than cash.
2.
Owner would like to use inventory Ledger to record and track sales, both to individual retail customers and stores ( wholesales)
He currently has one price for all CDs for regular customers in Canada, one price for preferred customers (wholesales) in Canada. One price for regular US customer and one price for preferred US customer (wholesales)
He has considered three alternatives for setting up these new records
A.
Enter all CDs into a Single Inventory Item Record.
B.
Group the CDs into small number of broad categories and create a single inventory record for each category.
C.
Create an inventory record for each CD title.
In addition to having one or more records, he can link one or more asset and cost account for his inventory records.
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CLASS 6 & 7- FINAL EXAM CASE QUESTION PREPARATION: a) Discuss the pro and cons of tracking his book sales through the inventory ledger.
2012
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