Financial Accounting Homework

This homework assignment presents two accounting problems. The first problem involves cost-volume-profit analysis for LykkeTil AS, a company producing a single product. Students are asked to determine the optimal quantity and price, calculate the maximum achievable margin and profit, analyze demand elasticity, and assess the profitability of exporting the product at a fixed price. The second problem focuses on the financial accounting for M & M's Lemonades AS, a newly established company. Students are required to prepare the opening balance sheet, record various transactions using journal entries, and calculate the profit and closing balance sheet for the period. The solutions provided include detailed calculations and explanations for each step.

Question 3.
LykkeTil AS produces only one type of product and believes that the relationship between
price and volume in the domestic market for this product is:
P = 3 600 to 1.2 X (where P is the unit price and X - number of requested devices period).
An analysis of costs gave the following relationship between total costs and amount in the
relevant interval:
TK(total costs) = 600 X + 900 000 (where X is the number of units).
Maximum production capacity is 2,500 units in the period.
a) gain optimum quantity and price. Calculate the maximum achievable margin and maximum
achievable result.
Total Cost = 600 x (2500) + 900000
= 2400000
Variable Cost = 2400000 – 900000
= 1500000
Contribution = Sales Price – Variable Cost
3600 – (1500000 / 2500 )
3600 – 600
= 3000
Break Even Point = Fixed Cost / Contribution per unit
900000 / 3000
= 300 units
Maximum Achievable Margin = 3000 per unit
Maximum Achievable Result = 3000 * 2500 = 7500000

b) the quantity and price are demand neutral elastic? Also calculate the maximum turnover
(TI).
Yes, the Cost-Volume- Price are neutral elastic
Maximum turnover = 2500 x 3600 = 9000000
c) As an alternative to selling at above market can now sell everything it produces abroad
(export) at a fixed price £ 1500, - per unit. What will gain optimal amount by selling in this
market, and what is the maximum achievable result?
Gain = (1500-600) = 900 per unit
Maximum Achievable result = Contribution per unit x Total units sold Less Fixed cost
(900 x 2500) – 900000
2250000 – 900000 = 1350000
Question 4.
Mikkel and Maria have 01.11.20X6( november 1`st 2016) started ”M & M`s Lemonades AS”
with the following assets (in NOK 1000)
Assets Valu
e
Van 150
Raw material storage 50
Property 970
1000 shares of XYZ AS (course(rate)
50/share) 50
PC, Printer, Telephones 30
Bank deposits 95
Cash 5
Machine for production of lemonade 500
Total assets 1
850
The assets are financed with 60% equity and 40% debt (loan from a local bank)
a) Enter the opening balance (IB in Norwegian) for ”M & M`s Lemonades AS” per
01.11.20X6 (1`sto f november 2016)

Opening Balance as on 1-11-2016 = Closing Cash and Cash equivalent + (Assets purchased x
1/60%)
5 + (1850 – 5) / 60%
Norwegian 3080
b) Specify how the following events / vouchers will be posted on the accounts in the
financial statement of ”M & M`s Lemonades AS” (the firm is within the toll area and
is registered for VAT) Registrations must be done without "draw up" accounts, ie to
include date, voucher number, account number and account name, and the amount to
be recorded debit (+) or credit (-) in accounts. Start with vouchers 100.
Take accounts from a standard account plan.
 2.11: Inserts ad in the local newspaper, 2 500 nok(norwegian kroner) inclusive
of 25% VAT. The local newspaper issues a bill with a maturity date of
15.11.2016.
Date Particulars Vch no Amount – Dr Amount - Cr
15-11-2016 Advertisement
A/c
100 2000
VAT Paid 100 250
Newspaper
vendor A/c
100 2500
 5.11: Sells 200 shares of XYZ for nok 60/share
Date Particulars Vch no Amount – Dr Amount - Cr
5-11-2016 Bank A/c No
xxxx5
101 12000
XYZ Shares 101 12000
 14.11: Cash recceipt: Various, stationery nok 12 500 inc VAT
Date Particulars Vch no Amount – Dr Amount - Cr
14-11-2016 Stationery
Expense
102 10000

VAT Paid 102 2500
Cash 102 12500
 15.11: Paying ad in the local newspaper on maturity
Date Particulars Vch no Amount – Dr Amount - Cr
15-11-2016 Newspaper
vendor A/c
103 2500
Bank A/c No
xxxx5
103 2500
 24.11: Fills gasolin eon the car for nok 800, cash
Date Particulars Vch no Amount – Dr Amount - Cr
24-11-2016 Gas and Fuel 104 800
Cash 104 800
 30.11: Sales Journal: Cash sales of goods in November nok 100 000 inclusive
of 25% VAT
Date Particulars Vch no Amount – Dr Amount - Cr
30-11-2016 Cash 105 100000
Sales 105 80000
VAT Payable 105 20000
 1.12: Bank Account charged with nok 6 167 in interest payments on the loan
(no installments)
Date Particulars Vch no Amount – Dr Amount - Cr
1-12-2016 Interest on loan 106 6167
Bank A/c No
xxxx5
106 6167
 7.12: Invoice from Lemon AS:
 Appliances (for resale) NOK 50 000

25% VAT NOK 12 500
Total NOK 62 500
Date Particulars Vch no Amount – Dr Amount - Cr
7-12-2016 Purchase 107 50000
VAT
Receivable
107 12500
Lemon AS 107 62500
15 days credit, 2%
 10.12: Credit note from Lemon AS
Lack of delivery per 7.12 NOK 3 000
25% VAT NOK 750
Total NOK 3 750
Date Particulars Vch no Amount – Dr Amount - Cr
10-12-2016 Lemon AS 108 3750
Purchase 108 3000
VAT
Receivable
108 750
 27.12: Bank Recceipt: Payment to Lemon AS per 27.12, see transaction of
7.12 and the ref. Credit note of 10.12.
Date Particulars Vch no Amount – Dr Amount - Cr
27-12-2016 Lemon AS 109 58750
Bank A/c No
xxxx5
109 58750
 29.12: Builds small extensions on the property for added storage capacity and
recceive the following documents:

Snekker AS
Tregata 3
6660 Skogsby
OrgNo NO 123 456 789 012 VAT
Bank account 132425768
Invoice 08/15/16 Skogsby, 29.12 20X6
M & M's Lemonades AS
Drikkegata 1
6010 Ålesund
 Extension materials NOK 100 000
 Hour consuption NOK 50 000
 VAT 25% NOK 37 500
Total NOK 187 500
Deadline: January 10, 20X7, 3%
 30.12: Bank Recceipt: Payment to carpenter AS, see transaction of 29.12
Date Particulars Vch no Amount – Dr Amount - Cr
30-12-2016 Capital WIP 110 187500
Bank A/c No
xxxx5
110 187500
 31.12: The price of XYZ company shares have fallen to US $ 45 per share, and M &
M`s Lemonades AS takes into account the change in value in the financial statements
Date Particulars Vch no Amount – Dr Amount - Cr
31-12-2016 Share Capital 111 5000
Profit and Loss 111 5000
 31.12: Bank account charged with NOK 6 167 in interest payments on the loan, and
NOK 148 000 in installments (repayment of loan)
Date Particulars Vch no Amount – Dr Amount - Cr
31-12-2016 Interest on 112 6167

Loan
Loan Account
xxxx5
112 148000
Bank A/c no
xxxx5
154167
 31.12: Results, inventory- commodity warehouse empty
Date Particulars Vch no Amount – Dr Amount - Cr
31-12-2016 Profit and Loss 113 50000
Inventory 113 50000
 31.12: Sales journal: Cash sales of goods in December, NOK 110 000 inclusive 25%
of VAT
Date Particulars Vch no Amount – Dr Amount - Cr
31-12-2016 Cash 114 110000
Sales 114 88000
VAT Payabe 33000
c) What Is "M & M'Lemonade`s AS" its profit for the period 01.11.20X6-31.12.20X6?
Profit : 44866 Considering all deductions of expenses and addition of Sales
d) What is "M & M's Lemonades AS" their balance per 31.12.20X6?
Capital Balance =
50000 – 5000 = 45000