Commerce

In June 2009, Wendy Winger organized a corporation to provide aerial photography services. The company, called Aerial Views, began operations immediately. Transactions during the month of June were as follows: June 1 The corporation issued 60,000 shares of capital stock to Wendy Winger in exchange for $60,000 cash. June 2 Purchased a plane from Utility Aircraft for 222 , 000. M a d e a 222,000. Made a 222 , 000. M a d e a 40,000 cash down payment and issued a note payable for the remaining balance. June 4 Paid Woodrow Airport$2,500 to rent office and hangar space for the month. June 15 Billed customers $8,320 for aerial photographs taken during the first half of June. June 18 Paid Hannigan's Hanger$1,890 for maintenance and repair services on the company plane. June 25 Collected $4,910 of the amounts billed to customers on June 15. June 30 Billed customers$16,450 for aerial photographs taken during the second half of the month. June 30 Paid $6,000 in salaries earned by employees during the second half of the month. June 30 Received a$2,510 bill from Peatree Petroleum for aircraft fuel purchased in June. The entire amount is due July 10. June 30 Declared a $2,000 dividend payable on July 15. The account titles used by Aerial Views are: Cash Retained Earnings Accounts Receivable Dividends Aircraft Aerial Photography Revenue Notes Payable Maintenance Expense Accounts Payable Fuel Expenses Dividends Payable Salaries Expenses Capital Stock Rent Expense Instructions: a. Prepare journal entries and post each transaction to appropriate ledger accounts. b. Prepare a trial balance dated June 30, 2009.

Silver Lining, Inc., provides investment advisory services. The company adjusts its accounts monthly, but performs closing entries annually on December 31. The firm's unadjusted trial balance dated December 31, 2009, is shown on the following: SILVER LINING, INC. Unadjusted Trial Balance December 31, 2009 Account Debit Credit Cash $42,835 Accounts receivable 2,000 Office supplies 205 Prepaid rent 1,200 Unexpired Insurance 270 Office equipment 54,000 Accumulated depreciation: office equipment$35,250 Accounts Payable 1,400 Interest Payable 360 Income Taxes Payable 1,750 Notes Payable 9,000 Unearned consulting services revenue 3,500 Capital stock 30,000 Retained earnings 8,000 Dividends 1,000 Consulting services revenue 60,000 Office supplies expenses 605 Depreciation expense: office equipment 8,250 Rent expense 3,525 Insurance expense 1,010 Salaries expense 27,100 Interest expense 360 Income taxes expense 6,900 Totals $149,260$149,260 Other Data: Accrued but unrecorded and uncollected consulting services total $1,500 at December 31, 2009. The company determined that$2,500 of previously unearned consulting services revenue had been earned at December 31, 2009. Office supplies on hand at December 31 total $110. The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years (72 months). The company prepaid its six-month rent agreement on October 1, 2009. The company prepaid its 12-month insurance policy on March 1, 2009. Accrued but unpaid salaries total$1,900 at December 31, 2009. On June 1, 2009 the company borrowed $9,000 by signing a nine-month, 8 percent note payable. The entire amount, plus interest, is due on March 1, 2010. The company's CPA estimates that income taxes expense for the entire year is$7,500. The unpaid portion of this amount is due early in 2010. Instructions: Prepare an income statement and statement of Retained Earnings for the year ended December 31, 2009. Also prepare the Company's Balance Sheet dated December 31, 2009.

While analyzing the financial statements if you cross the following, what probable reasons can lead to:-

Trial Balance under Periodic Inventory System. The following trial balance has been extracted from the books of MST Company on June 30, 2007: Debit Rs. Credit Rs. Cash 28,200 Notes Payable 3,200 Accounts Receivable / Debtors 41,000 Accounts Payable / Creditors 12,350 Notes Receivable 23,000 Taxes Payable 2,000 Materials 31,800 Rent Payable 1,020 Work in Process 4,000 Sales 100,000 Finished Goods 11,700 Capital Stock 100,000 Prepaid Insurance 200 Retained Earnings 47,050 Machinery & Equipment 93,500 Accumulated Depreciation 20,000 Materials Purchased 16,520 Direct Labour Cost 16,000 Factory Overhead Costs 17,480 Selling Costs 1,200 Administration Costs 1,020 Total Rs. 285,620 Total Rs. 285,620 Following further information are also available: Inventories as on June 30, 2007: Item Amount Materials Rs. 3,520 Work in Process Rs. 2,500 Finished Goods Rs. 10,000 There was a debit balance of Rs. 1,480 representing the difference between actual factory overhead cost of Rs. 17,480 and factory overhead cost applied to production at the rate of 100% of direct labour cost of Rs. 16,000. The variance was analyzed and it was found to be due to incorrect overhead application rate. This variance is to be charged to the entire production of the period. Required: a. Statement of Cost of Goods Manufactured and Sold on June 30, 2007 showing the costs at normal and at actual.

Variance Analysis, Budgeted Volume to be computed. Sofia Scientific Company estimated its factory overhead for the year as Rs.600,000 fixed, plus a variable rate of Rs.25 per direct labor. Factory overhead absorption rate as computed by the Cost Accountant was Rs.55 per direct labor hour. During the year the factory worked for 18,000 hours and actual factory overhead incurred were Rs.956,600. Required Budgeted volume at which the Cost Accountant computed the factory overhead absorption rate. Analysis of under or over absorbed factory overhead into volume and budget variances.

Sale of a company was Rs.100 million in a particular year. The cost of goods was 60% of the sales. Cost of Raw Materials was 60% the cost of Goods Manufactured. While labor cost was 20% of the CGM. Remaining were factory overheads labor cost was 80% variable and 20% was fixed while 30% of factory overheads were fixed. Selling Expenses (commission) were 5% of sales. While administrative expenses were 3% of sales. Financial expenses were 5% of sales. Income Tax was Rs.3million Dividend Rs. 10million. During the year the company operated at 80% efficiency. Required Work out the Break Even Sales and also Break Even Capacity.

What will be the impact of following on cash flow statement i.e. will they result in cash inflow or outflow: