Accounts and Budget Service L-III
@ethioexit
Version 1
Project one- Process payroll
The following data are taken from Ethiopian Road Corporation for the month of Yekatit 2005
Name of Employee
Salary
Allowance
Overtime
Remark
Rahel Aseffa
2,500
900
10hr
4-weekdays (2)
4- public holidays(2.50)
2-Evening (1.25)
Emebet Aseffa
Dillu Teshome
Abebe derje
5,000
10,000
12,500
1,000
1,200
1,400
6hr
8hr
-
Weekends(2)
public holiday(2.5)
-
Additional information
1. All Employees are permanent and worked 40 hours per week
2. All Employees Allowance are tax exempted up to Br 400
3. All Employees pay one month salary to be paid monthly within a year to Abay dam
Required
1. Prepared payroll sheet
2. Prepared necessary journal entries and payments of Liabilities (deductions) to the concerned body.
Project Two. Process Financial Transactions and Prepare Financial The accounts in the ledger of Ethiopian
Telecommunication Corporation with the unadjusted balance on June 30, at end the current year are as
follows:
Cash
87,500.00
Account Receivable
192,300.00
Merchandize inventory
290,500.00
Prepaid insurance
25,380.00
Store Supplies
16,500.00
Store equipment
179,000.00
Acc.Dep. of store equipment
50,600.00
Account payable
89,480.00
Salaries payable
Capital stock
360,000.00
Retaining earning
162,890.00
Dividends
120,000.00
Income summary
Sales
1,890,000.00
Purchase
1,220,100.00
Sales salaries expense
154,800.00
Advertising expense
49,600.00
Dep.expense of store equipment
Store supplies expense
Mis.selling expense
8,800.00
Office Salary expense
79,690.00
1|Page
Rent expense
80,000.00
Utilities expense
32,200
Taxes expense
17,000.00
Insurance expense
Mis General expense
7,200.00
Other income
7,600.00
The data needed for year ended adjustments on June 30 are as follows:
Merchandise inventory on June 30
301,000.00
Insurance expired during the year
12,800.00
Store supplies inventory on June 3
4,300.00
Depreciation for the current year
38,400.00
Accrued salaries on June 30
Sales salaries
5,600.00
Office salaries
2,600.00
Required
1. Prepared adjusting entries
2. Prepared income statement and balance sheet
Project Three: Bank Reconciliation
1. On May 31, 2002 Selam Company showed a balance in its cash account of Br 37,820.00 On June 2,
Selam received its Bank statement for the month ended May 31, which showed an ending balance
of Br 65,040.00
2. A matching of debits to the cash account on the books with deposits on the bank statement
showed that the Br 9,040.00 receipts of May 31 are included in cash but not included as deposit
on the bank statement.
3. An examination of checks issued and checks cleared showed three checks outstanding
No 9544
Br 6,440.00
No 9545
Br 3,360.00
No 9546
Br 14,460.00
Total
Br 24,260.00
4. Include with the bank statement a credit memo for Br 24,500.00 (principal of Br 24000.00 +Br
500.00 interest) for collection of note owed to selam by Ship Company.
5. Include with the bank statement is a Br 20,400.00 debit memo for an NSF check written by Kemal
and deposited by Selam
6. Charges made to Selam’s account include Br 240.00 for safe deposits box rent and Br 160.00 for
service charges
7. Check No 9550 for 10,160.00 to Taylor Company for the settlement of account payable recorded in
the cash payments Journals as Br 18,460.00
Required: From the oboe information
1. Prepared Bank Reconciliation
2. Pass necessary journal entries
Project Four Partnership
Given is the balance sheet of the WXY partnership on sene 30, 2004 the date the partners decided to liquidate
their partnership
WXY partnership
2|Page
Cash
Other Asset
40,000.00
680,000.00
Total asset
720,000.00
Balance sheet
April 30, 2002
Accounts payable
W-Capital
X-Capital
Y-Capital
Total liabilities and
capital
380,000.00
140,000.00
100,000.00
100,000.00
720,000.00
On May 1, the non-cash asset were sold for BR 356,000.00 W,X and Y share income and losses in a 5:3:2 ratios
Required: 1 prepared statement of partnership liquidation and all necessary journals entries to recorded
liquidation of the partnership.
Assume that any partners who had debit balances in their capital accounts after loss distributions
immediately paid cash to the partnership.
Project Five Taxes
Ato Bekele Assefa is a shareholder in Merkato Bank Share Company. He owned 300,000.00 shares of Br
3,000.00 par value common stock in the Bank. Merkato Bank declared and paid of Br 0.20 per shares.
A. How much dividend is given to Ato Bekele?
B. How much is tax is to be paid to the Tax Authority?
C. How much Ato Bekele will receive after tax?
D. Who is liable to pay the tax to the tax Authority?
Solution
Project One Process Payroll
Employee
s no
Name of
Employee
Basic
Salary
Transport
Allowance
over
time
Total
income
Income
Tax
Pension
contribution
Abay
Dam
Total
Deduction
Net
payment
00001 Rahel
2,500.00
900.00
320.31
3,720.31
361.56
175.00
208.33
744.89
2,975.42
00002 Embet
5,000.00
1,000.00
375.00
6,375.00
928.75
350.00
416.67
1,695.42
4,679.58
00003 Dillu
10,000.00
1,200.00
1,250.00
12,450.00
2,717.50
700.00
833.33
4,250.83
8,199.17
00004 Abete
12,500.00
1,400.00
13,900.00
3,225.00
875.00
1,041.67
5,141.67
8,758.33
30,000.00
4,500.00
36,445.31
7,232.81
2,100.00
2,500.00
11,832.81
24,612.50
Total
1,945.31
Journal entries
Salary expense -------------------------- 36,445.31
Income tax payable ----------------------------- 7,232.81
Abay Dam payable ------------------------------ 2,500.00
Pension payable ---------------------------------- 2,100.00
Salary payable ------------------------------------ 24,612.50
Pension expense = 30,000*11% ----------- 3,300.00
Pension payable -----------------------------------------3,300
When Salary is paid
Salary payable -------------------------- 24,612.50
Cash in bank --------------------------------- 26,512.50
3|Page
When liabilities are paid
Abay Dam payable ---------------------- 2,500.00
Income tax payable --------------------- 7,232.81
Pension payable ------------------------- 5,400.00
Cash in bank ---------------------------------- 15,132.81
Project Two: Process Financial transaction and Prepare Financial Reports
A) Income Summary -------------------- 290,500.00
Merchandise Inventory ------------------- 290,500.00
Merchandise Inventory ------------- 301,000.00
Income Summary --------------------------- 301,000.00
B) Insurance expense ---------------- 12,800.00
Insurance ------------------------------- 12,800.00
C) Store supplies expense -------------- 12,200.00
Store supplies ----------------------------- 12,200.00
D) Dep. Expense of store equipment ------------ 38,400.00
Acc. Dep. store equipment -------------------------- 38,400.00
E) Sales salaries expense ------------------- 5,600.00
Office salary expense ------------------- 2,600.00
Salaries payable -------------------------------------- 8,200.00
Ethiopian Telecommunication Corporation
Income statement
For the year ended June 30
Sales --------------------------------------------------------------------------------- 1,890,000.00
Other income --------------------------------------------------------------------------- 7,600.00
Total sales --------------------------------------------------------------------------- 1,897,600.00
Beginning inventory ---------------------------------- 290,500.00
Purchase ------------------------------------------------ 1,220,100.00
Merchandise available for sales ------------------ 1,510,600.00
Less ending inventory --------------------------------- (301,000.00)
Cost of Goods sold ---------------------------------------------------------------- 1,209,600.00
Gross Profit --------------------------------------------------------------------------- 688,000.00
Sales salaries expense ---------------------------------- 160,400.00
Advertising expense ---------------------------------------- 49,600.00
Dep. Expense of store equipment ------------------------ 38,400.00
Store supplies expense -------------------------------------- 12,200.00
Mis. Selling expense ------------------------------------------ 8,800.00
Office salary expense ----------------------------------------- 82,290.00
Rent expense ----------------------------------------------------- 80,000.00
Utilities expense ------------------------------------------------- 32,200.00
Taxes expense ---------------------------------------------------- 17,000.00
Insurance expense ----------------------------------------------- 12,800.00
Mis General expense ---------------------------------------------- 7,200.00
Total ------------------------------------------------------------------------------------------------------ 500,890.00
Net income ---------------------------------------------------------------------------------------------- 187,110.00
4|Page
Ethiopian Telecommunication Corporation
Balance sheet
June 30
Cash ------------------------------------------------------------------------------------- 87,500.00
Account receivable ----------------------------------------------------------------- 192,300.00
Merchandise inventory ------------------------------------------------------------ 301,000.00
Prepaid insurance --------------------------------------------------------------------- 12,580.00
Store supplies ---------------------------------------------------------------------------- 4,300.00
Store equipment ------------------------------------------------- 179,000.00
Acc. Dep. Of store equipment ----------------------------------(89,000.00)-------- 90,000.00
Accounts payable ------------------------------------------------------------------------------------------------- 89,480.00
Salaries payable ----------------------------------------------------------------------------------------------------- 8,200.00
Capital stock -------------------------------------------------------------------------------------------------------- 360,000.00
Retain earnings ----------------------------------------------------------------------------------------------------- 230,000.00
Total -------------------------------------------------------------------------------------------- 687,680.00687,680.00
Ending retained earning=Beginning retained earning +net income- dividend=162,890+187,110-120,000=230,000
Project Three. Bank reconciliation
Selam Company
Bank reconciliation
May 31, 2002
Balance per bank ------------------------------------------------------------- 65,040.00
Add: deposit in transit ------------------------------------------------------- 9,040.00
Subtotal --------------------------------------------------------------------------74,080.00
Deduct: outstanding check ------------------------------------------------ (24,260.00)
Adjusted balance ------------------------------------------------------------ 49,820.00
Balance per depositor ------------------------------------------------------ 37,820.00
Add: Errors ------------------------------------------ 8,300.00
Collection ------------------------------------------- 24,500.0032,800.00
Subtotal ---------------------------------------------------------------------- 70,620.00
Deduct: NSF ----------------------------------------- 20,400.00
Service charge ------------------------------------------- 400.00
20,800.00
Adjusted balance ------------------------------------------------------------- 49,820.00
A. Cash collection
Cash in bank ---------------------------- 24,500.00
Accounts receivable ------------------------ 24,000.00
Interest income -------------------------------- 500.00
B. error
Cash in bank ------------------------------ 8,300.00
Accounts payable -------------------------- 8,300.00
C. NSF
Account receivable ---------------------- 20,400.00
Cash in bank -------------------------------------- 20,400.00
D.
5|Page
Service charge ------------------------------ 400.00
Cash in bank -------------------------------------- 400.00
Project four partnerships
WXY partnership
Statement of partnership liquidation
April 30,2005
Cash +
Cash
NCA
Liability
W-Capital
X-capital + y-capital
Balance ----------------------- 40,000
+680,000 380,000 +140,000+
100,000+ 100,000
Realization division of loss 356,000 (680,000)
-(162,000)
(97,200) (64,800)
Balance after realization 396,000.00 380,000.00
22,000) 2,800
35,200
Payment of liability
(380,000.00)
(380,000)
Balance ----------------------------- 16,000.00
(22,000.00) 2,800.00 (35,200)
Collection from W-partners
22,000
22,000
Balance
38,000.00
2,800.00
35,200
Distribution of cash to partners (38,000.00)
(2,800.00)
(35,200)
Balancee
0
0
0
0
0
Journal entries
A. Sales of Non-cash Assets
Cash --------------------------------- 356,000.00
Loss on realization --------------- 324,000.00
Non-cash Assets ------------------------680,000.00
0
Distribution of loss to partners
W-capital ----------------------- 162,000.00
X-Capital ------------------------ 97,200.00
Y-capital ------------------------- 64,800.00
Loss on realization --------------------- 324,000.00
Payment of liability
Liability ------------------------ 380,000.00
Cash -------------------------------- 380,000.00
Collection from partners
Cash ---------------------------- 22000.00
W-capital ------------------------- 22000.00
Distribution of cash
X-capital ----------------------- 2,800.00
Y-capital ------------------------ 35,200.00
Cash ----------------------------------- 38,000.00
Project Five Taxes
Taxes
A. Dividend income = 300,000*.20 = 60,000.00
B. Tax on Dividend income = 60,000*10% = 6,000.00
C. Dividend income after tax = 60,000-6,000=54,000.00
D. Merkato bank is labile to pay the tax to tax Authority
1. Which of the following is not essentially the characteristic of taxation?
6|Page
A. It is a compulsory levy
B. It provides for non proportional return or benefit
C. It helps in financing government activity
D. It is an illegal collection
2. Assets in the statement of financial condition for in individuals reported at
A. Cost
B. Lower of cost or market
C. Estimated Cost
D. Market value
3. Taye and Tamiru are partners who share income and loss in the ratio of 2:1 who have a capital
balance of Br 130000.00 and 70000.00 respectively. If sisay, with the consent of Taye, acquired one –
half of Taye’s capital for Br 80000.00 for what amount would sisay capital account be credited is:
A. Br 100000.00
B. Br 80000.00
C. Br 65000.00
D. Br 40000.00
4. During a period in which general price level is raising which of the following would create a purchasing
power gain?
A. Holding cash
B. Holding a long term bonds payable
C. Holding inventory
D. Holding a note receivable
5. A corporation financial statement do not report cents amount. This is an example of the application of
which of following concepts?
A. Business entity
B. Going concern
C. Consistency
D. Materiality
6. Types of loan granted for a period of an overnight to a maximum of fourteen days:
A. Cash credited
B. Money at cell
C. Over draft facility
D. Term loan
7. Which of the following is the possible different between a check and a bank draft?
A. A draft cannot be payable to the bearer while check can be so drawn
B. A check can be drawn in one stated branch while a draft drawn for any branch
C. A draft may be discounted while check cannot be discounted
D. A banker is not under a legal obligation to pay the money of draft while for check the bank is
liable to pay the value of it
8. A petty cash fund is:
A. Used to pay up to 1,000.00 birr amount
B. Used to pay small payment
C. It is applicable only in small enterprise
D. Used to reimbursed change fund
9. A payment of cash for the purchase of merchandise would be recorded in
A. Purchase journal
B. Sales journal
C. Cash journal
7|Page
10.
11.
12.
13.
14.
15.
16.
17.
18.
D. Purchase discount journal
The controlling account in the general ledger that summarize the debits and credits to the individual
customers in the subsidiary ledger in entitled:
A. Account payable
B. Account receivable
C. Sales
D. Purchase
The balance in unearned rent at the end of period represents:
A. An asset
B. A liability
C. Revenue
D. An expense
The salary expense account has a credit balance of 10,000.00 on hamle 1, the beginning of the fiscal
year, after reversing entries have been posted but before any transaction has occurred. The balance
represents
A. An asset
B. A liability
C. Revenue
D. An expense
What is the maturity value of 90-day, 12% for 100,000.00?
A. 88,000.00
B. 100,000.00
C. 103,000.00
D. 112,000.00
At the end of the fiscal year before account are adjusted, account receivable has a balance of Br
400,000.00 and allowance for doubtful accounts has a credit balance 5,000.00. if the estimated of
uncollectable determine by against receivable is 17,000.00, the current portion to be made for
uncollectable accounts will be
A. 5,000.00
B. 12,000.00
C. 17,000.00
D. 400,000.00
Post –closing trail balance may include which of the following account
A. Sales
B. Salary expense
C. Account receivable
D. Interest expense
A credit may signify
A. An increase in asset account
B. A decrease in asset account
C. A decrease in liability account
D. A decrease in a capital account
The payment of cash for your client for the settlement of purchase on account would be recorded by
A. Debit for cash and credit for account receivable
B. Debit for account receivable and credit for cash
C. Debit for account payable and credit for cash
D. Debit for cash and credit for account payable
The properties owned by a business enterprise are:
A. Capital
8|Page
B. Owner’s equity
C. Assets
D. liability
19. in a business transaction the first occurrence can be recorded in the book of account is
A. journal
B. ledger
C. payment journal
D. receipt journal
20. Goods and documents are exempted in accordance with legislative, organizational guideline and
procedures plus It needs bank permits based on national bank directives, commercial banks policies.
This is refers to:
A. To have principal registration certificate
B. Regarding to import and export activities
C. Regarding to declaration of tax
D. It emphasis the internal control of a company
21. Assume that you have 5,000.00 euro in your hand. What is the equivalent amount of it in USD if the
exchange for a dollar is Birr 18 and for euro is Birr 24?
A. 6,666.67 USD
B. 5,833.33 USD
C. 5,000.00 USD
D. 120,000.00USD
Section B matching type questions
Column A
------------ 1. Mutual Agency
-------------2. Indirect tax
-------------3. Batch
-------------4. Ledger
-------------5. Credit card
-------------6. Cash
-------------7. L/C ( Letter of Credit)
-------- ----8. Credit memo
-------------9. SWOT Analysis
-------------10. Maintain quality documentation
-------------11. Supervision
-------------12. System control
-------------13. Check/CPO/
--------------14. Accrued revenue
--------------15. Term loan
1
2
3
4
Column B
A. Used to keep accurate data records
B. Account Receivable
C. Payment instrument
D. Used to improve business performance
E. Granted for fixed period of time
F. Small team
G. Helps to protect from fraud/corruption/
H. Secondary book
I. Needs the involvement of issuing and
advisory banks
J. Most liquid asset
K. Group of journal
L. Sales tax
M. Partnership
N. Corporation
O. The customer is to be credited
P. Plant asset
Q. Liability account
R. VISA
Multiple choice
D- it is an illegal collection
A-Cost
C-Br 65,000.00
C-holding inventory
9|Page
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
D-Materiality
B-Money at cell
A-A draft cannot be payable to the bearer while check can be so drawn
B-used to pay small payment
C-cash journal
B-Account receivable
B- A liability
D- An expense
C-103,000.00
B-12,000.00
C-Account receivable
B-A decrease in asset account
C-Debit for Account payable and credit for cash
C-Asset
A-journal
B-regarding to import and export activities
A-6666.67 USD
Matching
M-partnership
L-sales tax
K-group of journal
H-secondary book
R-Visa
J-most liquid asset
I-needs the involvement of issuing and advisory banks
O-the customer is to be credited
D-used to improve business performance
A-used to keep accurate data records
F-small team
G-Helps to protect from fraud/corruption
C-payment instrument
B-Account Receivable
E-Granted for fixed period of time
10 | P a g e