Accounting & Costing for Business PDF

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Accounting & Costing for Business

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Table of Contents
Task 1: Enter the transactions in Pat’s journal and ledger accounts and compile a trial
balance as at 31 December 2019....................................................................................... 3
1.1 Pat’s journal account as at 31 December 2019..................................................................... 3
1.2 Pat’s ledger account as at 31 December 2019 ...................................................................... 4
1.3 Pat’s Trial Balance as at 31 December 2019 ......................................................................... 6
Task 2............................................................................................................................... 7
2.1 “Financial statements provide useful information to a wide range of users” Discuss ............ 7
2.2 Shane’s trading and profit and loss account for the year to 31 March 2019 and the balance
sheet as at that date ................................................................................................................ 9
2.2.1 Shane’s trading and profit and loss account for the year to 31 March 2019 .................................... 9
2.2.2 Shane’s balance sheet for the year to 31 March 2019 ..................................................................... 10
Task 3: Identify and classify different types of cost of the new product ............................ 10
Task 4: Calculate the variances in as much detail as possible and identify possible causes
for the variances and recommend corrective actions for them......................................... 12
4.1 Variance Calculation of Claudia Limited’s product X .......................................................... 12
4.1.1 Sales Variances .................................................................................................................................. 12
4.1.2 Direct Material Variances.................................................................................................................. 12
4.1.3 Direct Labour Variances .................................................................................................................... 13
4.1.4 Variable Production Overhead Variances......................................................................................... 14
4.1.5 Fixed Production Overhead Variances.............................................................................................. 14
4.2 Possible Causes for the Variances of Claudia Limited’s Product X and Recommended
Corrective Actions for them.................................................................................................... 16
5.0 References ................................................................................................................ 18

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Task 1: Enter the transactions in Pat’s journal and ledger accounts and
compile a trial balance as at 31 December 2019
1.1 Pat’s journal account as at 31 December 2019
Pat’s Business
General Ledger Account
As at 31st December 2019
Date Description Relevant Account Debit
(Rs)
Credit (Rs)
01.12.19
Cash invested by Pat for the
business
Cash a/c 10,000
Capital a/c 10,000
02.12.19
Goods bought on credit from
creditors (Grass Rs.6000 and
Seed Rs.7000)
Purchases a/c 13,000
Creditors a/c 13,000
10.12.19
Goods sold on credit to
debtors (Fog Rs.3000 and
Mist Rs.4000)
Debtors a/c 7,000
Sales a/c 7,000
12.12.19
Goods returned to the
suppliers (Grass Rs.1000 and
Seed Rs.2000)
Creditors a/c 3,000
Purchase Return a/c 3,000
15.12.19
Additional goods bought on
credit from creditors (Grass
Rs.3000 and Seed Rs.4000)
Purchases a/c 7,000
Creditors a/c 7,000
20.12.19
Goods sold on credit to
debtors (Fog Rs.2000 and
Mist Rs.3000)
Debtors a/c 5,000
Sales a/c 5,000
24.12.19 Office expenses paid in cash
Office Expense a/c 5,000
Cash a/c 5,000
29.12.19
Cash received from debtors
(Fog Rs.4000 and Mist
Rs.6000)
Cash a/c 10,000
Debtors a/c 10,000
31.12.19
Cash paid to creditors (Grass
Rs.6000 and Seed Rs.8000)
Creditors a/c 14,000
Cash a/c 14,000

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1.2 Pat’s ledger account as at 31 December 2019
Debit Cash Account Credit
01.12.19 Capital 10,000 24.12.19 Office expense 5,000
29.12.19 Debtors 10,000 31.12.19 Creditors 14,000
31.12.19 Balance c/d 1,000
20,000 20,000
01.01.20 Balance b/f 1,000
Debit Capital Account Credit
31.12.19 Balance c/d 10,000 01.12.19 Cash 10,000
10,000 10,000
01.01.20 Balance b/f 10,000
Debit Purchases Account Credit
02.12.19 Creditors 13,000 31.12.19 Balance c/d 20,000
15.12.19 Creditors 7,000
20,000 20,000
01.01.20 Balance b/f 20,000
Debit Grass’s Account (Creditor) Credit
12.12.19 Purchase return 1,000 02.12.19 Purchases 6,000
31.12.19 Cash 6,000 15.12.19 Purchases 3,000
31.12.19 Balance c/d 2,000
9,000 9,000
01.01.20 Balance b/f 2,000