COCLEVEL IV 2016

Project 1. Process and Develop Budget

Project Information
Case I
ABC Company’s planning budget for the third quarter are shown below:
July August September Total
Budgeted Sales on account Br 600,000 Br 900,000 Br 500,000 Br 2,000,000
From past experience, the company has learned that 20% of a month’s sales are collected in the month of sale, another 70% are collected in the
month following sale and the remaining 10% are collected in the second month following sale. May sales totaled Br 430,000 and June sales
totaled Br, 540, 000.
Required
Task 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the third quarter.
ABC Company’s
Cash collections budget
July August September Total
Br 600,000 Br 900,000 Br 500,000 Br 2,000,000
May sales (10%) 43,000 43,000
June sales (70%, 10%) 378,000 54,000 432,000
July sales (20%, 70%, 10%) 120,000 420,000 60,000 600,000
August sales (20%, 70%) 180,000 630,000 810,000
September sales (20%) 100,000 100,000
Total 541,000 654,000 690,000 1,985,000

Task 2. Compute the accounts receivable as September 30.

From august sales: $900,000*10% $90,000
From September sales: $ 500,000*(70%+10%) $400,000
Total Account receivable $490,000

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Case II
Micro Corporation has budgeted sales of its microchips for next four month as follows:
Units Sold
April 20,000
May 25,000
June 35,000
.July 40,000
The company is preparing a production budget for the third quarter. Ending inventory level must equal 20% of the next month’s sales.
Required
Task 1. Calculate the ending inventory as of March 31.
Since the ending inventory for the month of March must be 20% of April sales of 20,000 units, ending inventory = 4,000 units

Task 2. Prepare a production budget for the third quarter by month and in total
Micro Corporation Company
Production budget
March 31.
April May June Quarter
Budgeted sales in unit 20,000 25,000 35,000 80,000
Add : desired ending inventory 5,000 7,000 8,000 8,000
Total needs 25,000 32,000 43,000 88,000
Less : desired beginning inventory 4,000 5,000 7,000 4,000
Required production 21,000 27,000 36,000 84,000

10% of the following month unit sales

July sales = 40,000 * 20% = 8000

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Project 2. Process Job order costing

Project Information
The following selected data are taken from Rich Company for the month of November
2022. Direct Material Inventory: November 1, 2022…...........105,000
Direct Materials Purchase.......................................................365,000
Direct Materials used...............................................................385,000
Total Manufacturing overhead costs.........................................450,000
Variable Manufacturing Overhead Costs…...............................265,000
Total Manufacturing costs incurred during November 2022…....1,610,000
Work in Process inventory: November 1, 2022….........................230,000
Cost of Goods Manufactured…......................................................1,660,000
Finished Goods Inventory: November 1, 2022................................130,000
Cost of Goods Sold….....................................................................1,770,000
Instruction: Under this project the candidate is expected to perform the tasks based on the information provided.
Task 1. Direct Materials inventory on on November 30, 2022
EDMI = BDM +DMP – DM Used
EDMI = 105,000 +365,000 -385,000
EDMI = 85,000
Task 2. Fixed Manufacturing Overhead Costs for November, 2022
FMOH = TMOH – VMOH
FMOH = 450,000 – 265,000
FMOH = 185,000
Task 3. Direct Manufacturing labor costs for November 2022
TMC = DM +DL+MOH
1610,000 = 385,000 + 450,000 +DL
DL = 1610,000 – 385,000 – 450,000
DL = 775,000
Task 4. Work in Process Inventory November 30, 2022
EWIP = BWIP +TMC – CGM
EWIP = 230,000 +1610, 000 – 1660,000
EWIP = 180,000

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Task 5. Cost of finished Goods available for sale in November 2022

CFGAFS = BFG+CGM
CFGAFS = 130,000 +1660, 000
CFGAFS = 1,790,000
Task 6. Finished Goods inventory on November 30, 2022
EFGI = CFGAFS – CGS
EFGI = 1,790,000 – 1,770,000
EFGI = 20,000
Project 3. Process Financial transaction and Prepare Financial report
Project Information
KK Ethiopia Corporation opened the year 2020G.C, with the following trial balance information
KK Ethiopia Corporation
Trial Balance
Jan, 1, 2020
Accounts Debit Credit
Cash 100,000
Account Receivable 300,000
Merchandise Inventory 254,000
Land 600,000
Account Payable 240,000
Loan Payable 120,000
Capital Stock 200,000
Retained Earning 440,000
Dividend
Revenues
Salaries Expense
Rent Expense
Supplies Expense
Interest Expense
Total 1,000,000 1,000,000

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Additional Information

KK Ethiopia Corporation has the following data for the year of 2020 G.
Jan. 2020G.C Dec.2020G.C
Account Receivable 430,000
Merchandise Inventory 162,000
Accounts Payable 238,000
Accrued Salary 134,000 145,000
Unearned sales 17,000 28,000
Prepaid expenses 11,000 16,000
Cash collected from customers during the period was 130,000
Cash paid for suppliers during the period was 44,000
Cash paid for operating expenses during the period was 34,000
Required

Task 1) Calculate the total sales income during the period Using both accrual and cash basis of accounting.
Under Accrual basis
Cash collected from customer-----------------------------130,000
+ Ending account receivable-----------------------------430,000
_Beginning Account receivable------------------------300,000
+ Beginning unearned sales------------------------------17, 0000
_Ending unearned sales---------------------------28, 0000
Revenue 249,000
Under cash basis
Only cash collected from customer--------------------130,000
Revenue 130,000

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Task 2) Calculate the total purchases during the period using accrual and cash basis of accounting.
Under Accrual basis
Cash paid for purchases-------------------------------44,000
+ Ending account payable---------------------------238,000
- Beginning account payable-------------------------240,000
Total purchase = 42,000
Under cash basis
= only Cash paid for purchases-------------------44,000
Total purchase 44,000
Task 3) Calculate the total Cost of the goods sold during the period using both accrual and cash basis of
accounting. Under Accrual basis under cash basis
Beginning inventory--------- 254,000 Beginning inventory----------254,000
+ Total purchase --------------42,000 + purchase inventory----------44,000
- Ending inventory ------------162,000 - Ending inventory-----------162,000
Cost of goods sold----------- 134,000 Cost of goods sold-----------136,000
Task 4) Calculate the total Operating expenses during the period using both accrual and cash basis of accounting.
Under Accrual basis
Cash paid for operating--------------------------------34,000
+ Beginning Prepaid expense-------------------------11,000
_ Ending Prepaid expense-----------------------------16,000
_ Beginning Accrued salaries------------------------134, 000
+ Ending Accrued salaries----------------------------145,000
Operating expense 40,000

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Under cash basis

Only Cash paid for operating-------------------------34,000
Operating expense--------------------------------34,000
Task 5) Prepare:-Financial Statements
I. Income statement

KK Ethiopia Corporation
Trial balances
Jan 31, 2020
Sales 249,000
Less: Cost of goods sold-------------------------(134,000)
Gross profit 115,000
Less: Operating expense--------------------------(40,000)
Net income 75,000
II. Statement of retained earnings
KK Ethiopia Corporation
Trial balances
Jan 31, 2020
Beginning Balance---------------------------------440,000
Add: Net income 75,000
Less: Dividends 0
Ending Retained earnings------------------------------515,000

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Project 4. Perform Accounting for Government and Not for Profit Entities
Project Information
Harari Municipality Approved and adopted the budget for the year 2014E.C On July 1. The estimated Revenue from property tax is br.
2,500,000.00, interest and penalty br. 15,000.00and license and permits br. 14,400.00, and the amount of authorization for appropriation for
general government is br. 1,500,000.00, public safety br. 600,000.00 and health and welfare br. 155,000.00: Required

Task 1. Calculate the Fund Balance

Fund balance = estimated Revenue – appropriation
Fund balance = (2500, 000+15,000+14,400) – (1,500,000+600,000+155,000)
Fund balance = 2,529,400 – 2,255,000
Fund balance= 274,400
Task 2. Make the necessary Journal entries Including the Subsidiary accounts.
Estimated Revenue-------------------------------2,529,400
Appropriation 2,255,000
Fund balance 274,400
Subsidiary
Property tax 2,500,000
Interest and penalty----------------------15,000
License and permits-----------------------14,400
General government--------------------------------1,500,000
Public safety 600,000

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Health and welfare 155,000

Project Information
Project 4.
TEBABER Industrial PLC manufactures a high –quality, fertilizer, which is used primarily by commercial vegetable growers, the following
partial payroll data were taken from the firm’s payroll records for the month of Hidar 2015 E.C
S.No Employees Name Basic salary Over Time
1 Alemu Megersa 18000.00 600.00
2 Hiwot Abay 2700.00 300.00
3 Fana Hailu 5200.00 1400.00
4 Hayat Mohammed 7800.00 1500.00
5 Tigist Desta 2200.00 1350.00
Total 45200.00 5150.00

Additional information

 A monthly house allowance of each employee is 11% of their basic salary.

 Pension contribution 7% from employees and 11% from the Employer.
 The employees are responsible to pay 10% of their basic salary for credit association
 House allowance of each employee is non-taxable.
 Transport allowance of each employee is ¼th of basic salary and of which in Excess of Birr 600 is taxable
Instruction: Under this project the candidate is expected to perform the tasks based on the information provided.

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COCLEVEL IV 2016

Task 1. Prepare payroll of the company for the month of Hidar 2015 E.C

S/n Employees Earnings Gross Taxable Deduction Total

name Basic House Transp Over earning Income Income tax Pension Other deduction Net pay remark
salary allowance allowance time contribution
1 Alemu Megers 18000 1980 4,500 600 25080 22500 6375 1260 1800 9435 15645 
2 Hiwot Abay 2700 297 675 300 3972 3075 318.75 189 270 777.75 3194.25 
3 Fana Hailu 5200 572 1300 1400 8472 7300 1260 364 520 2144 6328 
4 Hayat Moham 7800 858 1950 1500 12108 10650 2240 546 780 3566 8542 
5 Tigist Desta 2200 242 550 1350 4342 3550 407.5 154 220 781.5 3560.5 
Total 35,900 3,949 8,975 5,150 53,974 47,075 10,601.25 2513 3590 16,704.25 37,269.75 
Task 2 Make the necessary journal entry of the company for the month of Hidar 2015 E.C

1. Salary expense---------------------------53,974
Employment income tax------------------------10,601.25
Pension contribution----------------------------2,513
Credit and saving association-----------------3,590
Cash 37,269.75
(To record salary expense for the period)
2. Payroll tax expense-----------------------------3,949
Pension contribution----------------------------3,949
(To record payroll tax expense)
3. Credit and saving association---------------------3,590
Cash 3,590
(To record Credit and saving association)
4. Income tax payable------------------------10,601.25
Pension contribution----------------6,462
Cash 17,063.25
(To record payroll and withhold tax to the in land revenue)

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Task 3. TEBABER Industrial PLC makes salary payment to employees by bank and you assigned to prepare bank transfer letter but the bank
letter for Tigist is not correct and he complains this issue for correction. How can you handle this complain and resolve the problem.

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