The following is the summary of the receipts and issues of material in a Special Ice factory during December 2020. Prepare Store Ledger according to First in First Out Method. December 2020 1 Dec. Opening balance 500 units @ GH¢25 per unit 3 Dec. Issue 70 units 4 Dec. Issue 100 units 8 Dec. Issue 80 units 13 Dec. Received from supplier 200 units @ GH¢24.50 per unit 14 Dec. Returned to store 15 units @ GH¢24 per unit 16 Dec. Issue 180 units. 20 Dec. Received from supplier 240 units @ GH¢24.75 per unit 24 Dec. Issue 304 units. 25 Dec. Received from supplier 320 units @ GH¢24.50 per unit 26 Dec. Issue 112 units 27 Dec. Returned to store 12 units @ GH¢24.50 per unit 28 Dec. Received from supplier 100 units @ GH¢25 per unit
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The following is the summary of the receipts and issues of material in a Special Ice factory during December 2020. Prepare Store Ledger according to First in First Out Method.
December 2020
1 Dec. Opening balance 500 units @ GH¢25 per unit
3 Dec. Issue 70 units
4 Dec. Issue 100 units
8 Dec. Issue 80 units
13 Dec. Received from supplier 200 units @ GH¢24.50 per unit
14 Dec. Returned to store 15 units @ GH¢24 per unit
16 Dec. Issue 180 units.
20 Dec. Received from supplier 240 units @ GH¢24.75 per unit
24 Dec. Issue 304 units.
25 Dec. Received from supplier 320 units @ GH¢24.50 per unit
26 Dec. Issue 112 units
27 Dec. Returned to store 12 units @ GH¢24.50 per unit
28 Dec. Received from supplier 100 units @ GH¢25 per unit
B. Two components P, Q are used as follows.
Normal usage 1000 units per week each.
Re-ordering quantity P - 20,000 units
Q - 8,000 units
Re-ordering period P - 4 to 6 weeks
Q - 2 to 4 weeks
The minimum usage is 2000 units per week; with their maximum usage being 3000 units per week each.
Required
You are required to calculate the following each of the components:
(i) Minimum Stock Level
(ii) Maximum Stock Level
(iii) Average Stock Level
(iv) Re-ordering Level
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