Excel Work (Financial Statement)

accounting discussion question and need guidance to help me learn.

Based on the attached Material and Template, need to do all activities part, need to do those templates of the activities in Excel
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it’s totally Excel Work based on Financial statements, so Accounting background is required..
Requirements: Excel Work
Requirements: Excel
Section4PartAActivity1Q1CostDirectCostIndirectCostNeitherMachineryRepairsXOakPlanksxMetalChairSupportersxAccountingxWagesforAssemblyworkersxWagesforSecretariesxFreightonrawmaterialPurchasedxQ2Q#EquationSubstitutionSolutionQ2AQ2BActivity2Q#EquationSubstitutionSolutionQ1Q2Activity3Q1Q2
Section:ExtraHelpQ1DirectLabourRateFactoryOverhead3.902.402.00Q2Q3ItemClassEnrichment

Section4:PartBActivity1Q1Q2Q3Q4
Activity2Q1PurchasesJournalDateAccountCreditedPur.#Postref.AccountsPayableCreditPurchasesDebitGSTPaidonpurchasesMensClothingWomensclothingChildrensClothingQ22a)2b)PurchasesJournalDateAccountCreditedPur.#Postref.AccountsPayableCreditPurchasesDebitGSTPaidonpurchasesMeatEggsProduceMarch27ForwardXX1924.93849209741125.9328McCarthySuppliers431X401.251098218426.2528QuioteDistributors432X660.1920910430443.19Q2c
AccountSmith&jonesfoodProductsAccountNo.MonthDayParticularsPostrefDebitCreditDrCrBalanceMarch1Cr172.5010P1091.25Cr263.752dcompleteabove2eAccountAccountPayableAccountNo.211MonthDayParticularsPostrefDebitCreditDrCrBalancemarch1cr872.00AccountPurchases-MeatAccountNo.511MonthDayParticularsPostrefDebitCreditDrCrBalancemarch1dr942.00
AccountPurchases-EGGSAccountNo.512MonthDayParticularsPostrefDebitCreditDrCrBalancemarch1dr737.00AccountPurchases-ProduceAccountNo.513MonthDayParticularsPostrefDebitCreditDrCrBalancemarch1dr831.00AccountGSTpaidonPurchasesAccountNo.514MonthDayParticularsPostrefDebitCreditDrCrBalancemarch1dr534.91
Activity3Q1SalesJournalDateAccountDebitedSales.#Postref.AccountsreceivableCreditPurchasesDebitGSTChargedonpurchasesStereoTVVCRFollowUpActivitiesQ1,2,3SalesJournalDateAccountDebitedSales.#Postref.AccountsreceivableCreditPurchasesDebitGSTChargedonpurchasesToolsGamesPuzzles
AccountAccountsReceivableAccountNo.111MonthDayParticularsPostrefDebitCreditDrCrBalanceNovember1dr8362.50AccountSales-ToysAccountNo.411MonthDayParticularsPostrefDebitCreditDrCrBalanceNovember1cr852.60AccountSales-GamesAccountNo.412MonthDayParticularsPostrefDebitCreditDrCrBalanceNovember1cr772.90AccountSales-PuzzlesAccountNo.413MonthDayParticularsPostrefDebitCreditDrCrBalanceNovember1cr1154.60
AccountGSTchargedonSalesAccountNo.414MonthDayParticularsPostrefDebitCreditDrCrBalanceNovember1cr585.38EnrichmentPleasetrytocompletetheenrichmenttasks..ItmaybeinterestingforyourownandmyfinancialunderstandingYoudonotneedtowriteareportjustanswerthequestions.
Manufa~turin~ ann/or ~e~artmental A~c~untin~ This section has been divided into two parts: Part A:Accounting for a Manufacturing Business Part B: Departmental Accounting Depending on your career goals, and after consulting with your teacher, do either Part A or Part B. You may decide to do BOTH. In Part A you will examine the accounting of a manufacturing business. You will study the differences in a manufacturing business, the statement of goods manufactured, and appropriate journal entries for a manufacturing business. In Part B you will examine departmental accounting. You will study how departmental accounting affects purchases, sales, cash payments, and cash receipts. FIN 301 SECTION 4: Manufacturing and/or Departmental Accounting
62 Part A A~~ounlln~ tor a Manuta~turin~ ~usines~ JUNE has been sewing costumes for ballets and other entertainment functions for the past ten years. Her styles are unique, and she has published a small book of her designs. In the last year, June has had so many requests for her costumes that she has decided to manufacture the items and sell them through several local stores. What seemed like a simple idea has now grown to a large manufacturing business. Changes to the manner in which June has been conducting her accounting system will now be necessary to suit a manufacturing business. In Part A of this section you will examine the differences in a manufacturing business and prepare a statement of manufactured goods. SECTION 4A: Accounting for a Manufacturing Business
T manufacturing business: a business tllat uses the raw materials It buys to create the product it se/ls overhead: all costs, excejJt direct labour and moterials, iNcurred iii the prodtlctiOlt 0/ montl/aclllred goods …. FIN 301 ACTIVITY I “What Is a Manufacturing Business? You have examined a service business and a merchandising business up to this point in your studies of Financial Management. What is different about a manufacturing business? A merchandising business buys the goods it sells in their ready-for-sale state. A manufacturing business uses the raw materials it buys to create the product it sells. Therefore, the manufacturer must combine the balances of a number of material, labour, and overhead accounts to determine the cost of goods it manufactures for sale. Look at the comparison of the calculation for cost of merchandise sold between a merchandising business and a manufacturing business. Merchandising Business Beginning Merchandise Inventory Purchases Goods Available for Sale Ending Merchandise Inventory Cost of Merchandise Sold 15000 30000 45000 12400 32 600 Manufacturing Business Beginning Finished Goods Inventory Cost of Goods Manufactured Goods Available for Sale Ending Finished Goods Inventory Cost of Merchandise Sold SECTION 4A: Accounting for a Manufacturing Business 11000 165000 176000 10800 165 200 63
64 Components of Manufacturing Cost Direct Materials The physical parts used to produce the finished goods in the manufacturing process are direct materials. They are also known as raw materials. For example, the direct materials for a jean manufacturer would include denim, zippers, thread, buttons, and so on. Direct materials are easy to measure and trace, and, therefore, can be apportioned to units of production with confidence. Direct Labour The labour involved specifically with the products being manufactured is called direct labour. The wages earned from direct labour may be assigned directly to each unit of finished product. Factory Overhead All manufacturing costs other than direct labour and material costs are called factory overhead. However, factory overhead does not include selling and administrative expenses because these two categories are not incurred in the manufacturing process. Indirect labour Indirect labour is the labour involved in the manufacturing process but that is not applied specifically to the finished product. Examples include supervisors and janitors. Indirect Materials Indirect materials are used in the manufacturing process but do not enter into or become part of the finished product. Indirect materials may include factory supplies such as grease and oil for machinery. The following are additional examples of factory overhead costs: • supervision • factory utilities • repairs and maintenance of machinery • factory taxes • factory supplies used • depreciation of factory building, equipment, and machinery SECTION 4A: Accounting for a Manufacturing Business
T overhead application rate: expresses factory overltead as a dollar amoultt per every dollar 0/ direct labour illvo/ved FIN 301 1. For each of the following costs for Able Table Manufacturing, determine whether it is a direct cost, an indirect cost, or neither. Place a check mark (V’) in the appropriate column. The first one is done for you. Cost Direct Indirect Neither Cost Cost machinery repairs V’ oak planks metal chair supports accounting wages for assembly line workers wages for secretaries freight on raw materials purchased Compare your responses with those in the Appendix, Section 4A: Activity I. Factory overhead is distributed to inventory according to an overhead application rate. This application rate expresses factory overhead as a dollar amount per every dollar of direct labour involved. .. Total Factory Overhead Factory Overhead Application Rate = 1i I D· L b ota Irect a our For example, the factory overhead application rate is $2.40. This ratio means that $2.40 of factory overhead is incurred for every $1.00 of direct labour. If the direct labour assigned to the finished goods amounts to $1500, then the factory overhead assigned will be $3600 (1500 x 2.40). The goods in process and finished goods inventories are assigned costs by totalling the raw materials used, the direct labour, and the factory overhead. 2. Corinthia Fencing has the following figures at hand: • raw material costs: $8000 • direct labour costs: $14 000 • freight on raw materials: $845 • factory overhead costs: $29 000 a. Calculate the factory overhead application rate. b. Calculate the total manufacturing costs. Compare your responses with those in the Appendix, Section 4A: Activity I. SECTION 4A: Accounting for a Manufacturing Business 65
66 ACTIVITY 2 Accounts Required by a Manufacturing Business The ledger of a manufacturing business will, by necessity, contain more accounts than a merchandising or service business. Some of the more common accounts are as follows: • raw materials purchases account The cost of all direct materials is debited to the raw materials purchases account. • raw materials inventory account Most manufacturing companies have partially completed products called goods in process or work in process on hand. These are products in the process of being manufactured. The amount of work in process is determined by a physical inventory count. The cost of this inventory is debited to the goods in process inventory account when closing entries are made. • finished goods inventory account The finished goods of a manufacturer are similar to a store’s merchandise. They are products that are ready to sell. Again, a physical count of the ending finished goods inventory provides the necessary information to record the end of fiscal period balance in the finished goods inventory account. This is done when closing entries are completed. The three inventories-raw materials, goods in process, and flllished goods-are classified as current assets on the balance sheet. SECTION 4A: Accounting for a Manufacturing Business
FIN 301 MANUFACTURING PRODUCT COSTS $ Cash or Accounts Payable -Raw Materials Purchases Direct Labour Factory Overhead –Manufacturing Statement Raw Materials Inventory Goods in Process Inventory Finished Goods Inventory 1. Sharlene has been operating a manufacturing business for several months and has come to you for advice. She says that she understands the idea of direct versus indirect labour, but has problems applying this idea in her operations. Sharlene’s machine operators work on as many as fifteen different products or jobs during each day, sometimes looking after more than one machine at the same time. Therefore, it is very difficult to assign the labour costs among these jobs. Sharlene asks you, “Just what is direct labour?” 2. Canvas Totes Manufacturing has a policy that it always assumes that the work in process inventory is 50% complete. The accountant says that this makes the preparation of the year-end financial statements much easier because no one has to estimate the actual degree of completion. All that is required is to count the uncompleted units. Evaluate the company’s policy. Do you agree or disagree with this policy? Compare your responses with those in the Appendix, Section 4A:Activity 2. SECTION 4A: Accounting for a Manufacturing Business 67
68 ACTIVITY 3 Manufacturing Statement When operating a merchandising business (where goods are purchased wholesale and sold at an increased price), the calculation of the cost of the merchandise sold is straightforward. The calculations required for a manufacturing business are more complex, and therefore require a more complex method of reporting the information. Look at the following illustration. -OVERHEAD ITEMS, MANUFACTURING STATEMENT and the INCOME STATEMENT Factory Overhead Items Indirect labour Factory rent Other items Total $ x xxx x xxx x xxx $30000 Manufacturing Statement Direct materials Direct labour Overhead Total Beginning goods in process Ending goods in process Cost of goods manufactured Income Statement Sales Beginning finished goods Cost of goods manufactured Ending finished goods Cost of goods sold Gross profit Expenses Net Income $ xx xxx xx xxx 30000 $ xx xxx x xxx (x xxx) $170500 $ xxx xxx $ xx xxx 170500 (xx xxx) $ xxx xxx $ xx xxx xx xxx $ xx xxx SECTION 4A: Accounting for a Manufacturing Business
manufacturing statement: a statement out/tilillK the costs iltvolved in momt/actttrtJ,g goods,· also kHoum as 0 schedule 0/ cost 0/ goods maNufactured FIN 301 The cost of goods manufactured is included in the income statement. This calculation is arrived at by completing a statement of cost of goods manufactured, or a manufacturing statement. The cost elements of manufacturing are as follows: • direct materials (or raw materials) • direct labour • factory overhead Look at the following manufacturing statement for Opal Manufacturing Company. Opal Manufacturing Company Manufacturing Statement For year ended December 31, 19v: Direct Materials Raw Materials Inventory, january 1 9000.00 Raw Materials Purchased 79000.00 Freight all Raw Materials Purchased 1850.00 Delivered Cost of Raw Materials Purchased 80850.00 Raw Materials Ready for Use 89850.00 Less: Raw Materials Inventory, December 31 11500.00 Direct Materials Used 78350.00 Direct Labour 65000.00 Factory Overhead Costs Indirect Labour 8000.00 Supervision 5000.00 Factory Utilities 12000.00 Repairs and Maintenance of Machillery 2350.00 Factory Taxes 5650.00 Factory Supplies Used 2340.00 Factory Insura.nce Expired 1200.00 Depreciation of Machinery and Equipment .. 1 100.00 Depreciation 0/ Factory Building 2350.00 Total Factory Overhead Cost 39990.00 Total Manu/acturing Costs 1&1340.00 Goods in Process Inventory.]anuary 1 3150.00 Total Goods ill Process During the j’ear 186490.00 Less: Goods in Process Inventory, December 31 7200.00 Cost a/Goods Manu/actured 179290.00 Note the four sections of the manufacturing statement: D D Direct Materials D Direct Labour D Factory Overhead (including all indirect costs) Cost of Goods Manufactured SECTION 4A: Accounting for a Manufacturing Business 69
70 1. List three benefits of separating the financial figures for materials, labour, and overhead. 2. Given the following information, what is the cost of goods manufactured for Davidson Manufacturing for the year ended December 31, 19xx? • beginning raw materials: $5500 • ending raw materials: $4000 • direct labour: $12 250 • raw materials purchased: $7400 • depreciation on factory equipment: $6500 • factory repairs and maintenance: $3300 • beginning goods in process inventory: $5700 • ending goods in process inventory: $6300 Compare your responses with those in the Appendix, Section 4A:Activity 3. Part A is a brief introduction to the world of manufacturing. There are many details concerning the recording of financial information for a manufacturing business that complicate the records. A strong background in accounting is therefore essential. FOLLOW-UP ACTIVITIES If you had difficulties understanding the concepts in the activities, it is recommended that you do the Extra Help. If you have a clear understanding of the concepts, it is recommended that you do the Enrichment. SECTION 4A: Accounting for a Manufacturing Business
FIN 301 Extra Help A manufacturing business is more complex than other forms of business. A manufacturing business must consider direct labour, direct materials, and factory overhead when determining the prices of finished products. The formula for the factory overhead rate is as follows: F 0 h d Ra Total Factory Overhead actory ver ea te = —-~—­Total Direct Labour For example, if the total factory overhead is $10 000 and the total of direct labour is $5000, the factory overhead rate is $2. 1. If the factory overhead rate is $3.50, this means that for every $1.00 of direct labour, $3.50 is apportioned to factory overhead. Using this information, complete the following chart. Direct Labour Rate Factory Overhead 13 000 3.90 14 sao 2.40 24 sao 2.00 2. List the four sections of a manufacturing statement. 3. Carlo’s Pizza manufactures frozen pizzas. Determine whether the items in the chart are direct labour (DL), indirect labour (IDL), direct materials (DM), or indirect materials (IDM). Item Class machinery repairs pizza dough baker janitorial work ovens Compare your responses with those in the Appendix, Section 4A: Extra Help, SECTION 4A: Accounting for a Manufacturing Business 71
72 Enrichment Given the following information, what is the cost of goods manufactured for Allison Manufacturing for the year ended December 31, 19xx? • beginning raw materials: $6000 • depreciation on factory equipment: $4000 • ending raw materials: $3000 • factory repairs and maintenance: $2500 • direct labour: $13 500 • beginning goods in process inventory: $6800 • raw materials purchased: $8200 • ending goods in process inventory: $7900 Compare your responses with those in the Appendix, Section 4A: Enrichment. CONCLUSION The complexitites of the accounting system required to keep accurate records for a manufacturing business require a highly skilled individual with a knowledge of both the business and financial management. Before entering into, or expanding into, a manufacturing business, like June did with her costume business, careful consideration of all the aspects of financial management are required in order for the business to become and remain successful. ASSIGNMENT Turn to your Assignment Booklet and do the assignment for Section 4 Part A. SECTION 4A: Accounting for a Manufacturing Business
FIN 301 PartE ~e~arlmenlal A~munUn~ GREG began his automotive repair business in a small, central location. As his reputation for excellent work grew, so did Greg’s Auto Centre. Soon he began selling parts; doing customized paint and upholstery for vans; and selling canopies, running boards, and specialty wheel covers for assorted vehicles. His staff has grown from four to twenty-four. Greg has always operated on a cash basis; but now that his client list has grown, he has found it necessary to extend credit to customers and have credit extended to him for purchases. Greg has found that it works best if one person handles the accounting for the sales and another handles the accounting for the purchases. As a result of growth and diversity, Greg has evolved his business accounting into departmental accounting. In this section you will examine departmental accounting as it affects purchases and cash payments and sales and cash receipts. SECTION 4B: Departmental Accounting 73
departmental accounting system: an accounting system divIded into categories (01′ dejar/meJtts) “” ACTIVITY I Departrnen tal Accounting Defined A departmental accounting system is used by businesses to record accounting data into two or more departments within their operations. A department store is an excellent example of an organization that may use the departmental approach. Management must be knowledgeable about all facets of business and be able to make decisions in regards to the efficiency of its departments and store. Departmentalization, in regards to decision making, is needed for internal use only. It is often confidential and not designed for public availability, since it may give some advantage to competitors. The records displayed through the departmentalized process allows management to see the revenue and expenses for each department and determine how this relates to the overall performance of the business. Departmental accounting information can be useful in the following ways: • planning future wants and needs related to the product sold • providing valuable decision-making information about the results of business operations • planning the need for space and facilities • identifying problem areas • calculating the pricing structure of the products so that the company can be competitive within the marketplace 1. In the introduction, Greg, the owner of Greg’s Auto Centre, switched to departmental accounting. Give some reasons why Greg felt the need to move to departmental accounting. 2. What would be the disadvantage of Greg providing departmental sales information to the general public? Compare your responses with those in the Appendix, Section 4B:Activity I. 74 SECTION 4B: Departmental Accounting
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Furniture Inventory, January I 180650.00 Net Purchases for 10520.65 January Net Sales for January 15789.88 Gross Profit on Sales 35% of sales for Previous Year Carpet Inventory, January I 98546.90 Net Purchases for 5852.24 January Net Sales for January 8891.17 Gross Profit on Sales 30% of sales for Previous Year Appliances Inventory, January I 198875.50 Net Purchases for 45289.00 January Net Sales for January 19450.88 Gross Profit on Sales 27% of sales for Previous Year Complete the interim statement of gross profit for the business for the month ended January 31. SECTION 4B: Departmental Accounting -' « f-a f-~ w U z « :J 0.. 0.. « . f-w 0.. '" « u w '" ::J t: z '" ::J ~ ~ " " ~ " ~ "< '" '" ‘” ‘” …. 5l ~ ‘” ~ …. “-…., …; ‘” ‘” ‘” ‘” ‘” <0 ;:;>; ~ ‘” ‘” eli g: “> …., ~ . ) Q) N M “” ~ ) ‘” ::il :os ‘” -L ….. UJ u • u within the day·to·day operations of the Vl <"-« '" :§; '" :2 .,; .... t2 ..... :os ~ '" ::g ~ ~ ~ .... '" business. If business activity has a I U t:~ limited number of entries per month, 0:: £'" :l the general debit or credit columns will -ti ~ u ” ~ ~ .~ c ” 1′: ~ ‘” ‘” a .~ The purchases journal for Williams’ u ~ ” ~ ‘” u ~ ]’ Department Store is shown. Note the < '" a .... ~ i5l, g '" column headings at the top of the tl .~ .~ " journal " ~ .~ " '" a ~ "1 "" i:1 .", "" J! '" .1l ~ ~ The first line of the journal shows how ..... '" t... 0) ~ the June 1 transaction would be 1;1 0 ~! recorded, followed by a series of "" '" "" '" transactions in June. N M . I " ~ ~ 80 SECTION 4B: Departmental Accounting 1. Carlotta's Clothiers made the following .... -N -~ ~ ~ purchases in March, 19xx. OJ "" ~ ~ c ~ t-0 ~ Mar. 4 Purchased from Wagner's '" ." ~ t:J 'iii 1: Wholesalers 50 girls' tops at $18 "-~ "-each plus GST. Purchases No. 484 .~ .. 5 Purchased from Catalina Swimwear c c ~ .--6-5 25 ladies' bathing suits at $24 each = 0 60 plus GST. Purchases No. 485 ~ :0 ~ .~ .. 6 Purchased from Harvard Men's 0 c c ~ ~ --Wholesalers 30 suits at $249 each ~ e-5 ~ 00 plus GST. Purchases No. 486 ~ :;0 u c ~ "-a. Record the transactions on page 14 of the .. purchases journal. . ~ c CL ~ ~ L.2 ...J U b. Total the journal as of March 6, and prove <{ Z that the debits equal the credits. a: ::> ~ ~ ~ 0 c: _ ._ ~-“.” ~ o ~ ~ Vl u >-c UJ <~u Vl <{ I U ~~ . ~ a: ci:'" ::> c.. L: 0 ~z Compare your responses with those in the Appendix, Section 4B:Activity 2. FIN 301 SECTION 4B: Departmental Accounting 81
82 Posting from the Purchases Journal Two major po stings occur from the purchases journal: posting individual amounts to the subsidiary ledgers and posting column totals to the general ledgers. When posting individual amounts, post each transaction to the vendor’s individual ledger card. For instance, using the purchases journal for Williams’ Department Store, the June 1 transaction would be posted as follows: Name Ben’s Wholesale I 2 ] 4 5 Post Credit Date Item Ref. Debit Credit Balance 19« -i~lle 1 350.00 1 P8 834.60 1 184.60 Note: The P8 in the Posting Reference column shows that this posting was obtained from page 8 of the purchases journal. —When posting column totals, post each total to its respective general ledger account. For instance, the following shows how the total of the Accounts Payable Credit column is posted to the accounts payable general ledger account. I 2 ] 4 5 Account Accounts Payable Account No 201 Date Item Post Debit Credit D’ Balance “r c, I llu:a 1 CR 4237.50 I “”‘ 2 30 P8 5669.93 CR 9907.43 2 ] ] 4 4 5 5 SECTION 4B: Departmental Accounting
(fJ t:rI B o Z .”. ~ b ~ ” … g ‘” ‘” ~ -~ ” ” ‘” ‘” ” ~ ~. 00 IN I 2 3 4 15 ” 17 18 Date Account Credited 1″,” 1 Ben’s Wholesale JUHe 2 Hastings Men’s Wear 7 Chinook Children~ Clothing 9 Japanese Imports Ltd. ~ /’. ~ 30 Suzie Fashions 30 Total PURCHASES JOURNAL Accounts Pur. Post Payable Men’s No. Ref. Credit Clothing 241 ./ 834.60 600.00 242 ./ 321.00 300.00 243 ./ 59.65 244 ./ 1581.46 475.00 ~ 253 ./ 176.55 ./ ./ 5669.93 2850.00 (20l! (SOl! Page 8 Purchases Debit GST Women’s Children’s Paid on Clothing Clothing Purchases 180.00 54.60 I 21.00 2 55.75 3.90 l 655.00 348.00 103.46 4 I ~ ‘-/ ~ 165.00 11.55 15 1655.00 794.00 370.93 ” (S02) (S03) (S04) 17 18 () 0 o ::> 8 n ‘0 ro ~oo ~~ ro ~ ” ::t” _. ro 5”0 o e:.~ ~5′ oClq if> _. P’. 00 ::> n Clq 0 …. 8 “”0 ‘”‘~ …. ~ ‘” ‘” ::> p.. n • 2i5 go ‘” ‘0 ” …. g. 0> if> m ~ . o ” …. o e’.. ;;1. :=: 0′ o po;” 00 if> s: 0′ ” Y’
84 2. The following invoice was received by Jason Farms from Smith & Jones Food Products. Follow the instructions to record the information for Jason Farms. a. Study the invoice, and complete the notation for the three departments used by Jason Farms. Smith & Jones Food Products 172 Valley Road TO: Jason Farms 1700 Elbow Drive SW Calgary, Alberta T2YOS3 Red Deer, Alberta T2X 185 DATE: March 30,l9xx INVOICE: 1290 TERMS OF SALE: 2/10, n/30 Quantity Description Unit Price Amount GST 25 T-Bone Steaks 8.00 200.00 14.00 15 doz Grade A Eggs 1.40 21.00 1.47 30 head Lettuce 2.25 67.50 4.73 —.. –i-.-.—-~ –i-P433 I I–i-,——Total SECTION 4B: Departmental Accounting Total 214.00 22.47 72.23 308.70
(fJ ttl B o z …. eo t:l .g. ‘” ~ ‘” ~ -:.. ” ” <::> ‘” ‘” ~ -. ~ co In Date I ””’ 27 March 2 28 3 28 4 5 , 7 PURCHASES JOURNAL Accounts Account Credited Pur. Post Payable No. Ref. Credit Forwarded Balance ./ ./ 1924.93 McCarthy’s Suppliers 431 ./ 401.25 Quiote Distributors 432 ./ 660.19 Page II Purchases Debit GST Paid on Meat Eggs Produce Purchases 849.00 209.00 741.00 125.93 I 109.00 82.00 184.00 26.25 2 209.00 104.00 304.00 43.19 3 4 5 , 7 cr ‘0;:0 ” rJ> .., ” ” 0 cr.., “” p,. en _ rJ> cr en rJ> c· …. · ” g, .., 0 ” .., !’:.a . “” 0: o ” ” o ” -e. ” ‘” p,. 5’ :;. ‘” ~. o ()’ rJ> o ” ‘0 “” I)Q ‘” …. …. o “‘” :;. ‘”
86 c. Post the March 30 entry to the accounts payable subsidiary ledger. Name Smith & Jones Food Products Post Credit Date Item Ref. Debit Credit Balance J 19xx 1 172.50 March 2 10 PI0 91.25 263.75 3 4 5 d. Total and rule the columns of the purchases journal. e. Post the totals of the special columns of the purchases journal to the general ledger. Account Accounts Payable Account No 211 Date Item p~, Debit Credit DR Balance Ref. CR J 19xx 1 CR 872.00 MaTch 2 ) 4 5 Account Purchases-Meat Account No 511 Date Item PO$t Debit Credit DR Balance Ref. CR J 19xx 1 DR 942.00 March 2 ) 4 5 Account Purchases-Eggs Account No 512 Date Item Post Debit Credit DR Balance Ref. CR J 19xx 1 DR 737.00 March 2 ) 4 5 SECTION 4B: Departmental Accounting J 2 ) 4 5 J 2 ) 4 5 J 2 ) 4 5 J 2 ) 4 5
Account Purchases-Produce Account No 513 Date Item ?~, Debit Credit DR Balance Ref. CR I 19u 1 DR 831.00 I May(h 2 2 J J 4 4 5 5 Account CST Paid on Purchases Account No 514 Date Item ?~, Debit Credit DR Balance ReI. CR I J9u 1 DR 534.91 I Mardi 2 2 J J 4 4 5 5 Compare your responses with those in the Appendix, Section 48: Activity 2. I FIN 301 A Note About Cash Payments A general rule used by many businesses is that all payments other than small petty cash expenditures are made by cheque and not cash. Each cheque written must have a source document to support the payment. The large number of cheques issued by businesses makes the use of the cash payments journal much more efficient. In departmental accounting, the use of special columns makes the recording and decision making much easier in regards to accounting documents. The cash payments journal will be the same for a departmental business as a typical business. The recording of the different department is made when the purchases are made. No extra columns are required for the cash payments. SECTION 4B: Departmental Accounting 87
sales invoice: tile SOltrCe dOCll1Jlell t for 10101 sales 0/ mere/lat/dise made by each department willl;’lo company 88 ACTIVITY 3 Departmental Sales and Cash Receipts Sales Invoice When merchandise is sold on account to a company, the seller issues a sales invoice to the buyer. A sales invoice is the source document for all sales of merchandise made by each department within a company. TO: Mindy Wright 11762 -57 Avenue SW Red Deer, Alberta T6L2S4 lJh;t~·s EI~C+ron<: Supply Store l2 Fi~ldcrest Rood 8~C>..JmOflt. Alberto TbR 2L3 DATE: February 1, 19xx INVOICE: 215 TERMS OF SALE: 2/10, n/30 Quantity Description Unit Price Stereo TV VCR 1 Stereo, Model #3930 345.00 345.00 (tuner, tape deck, and 2 speakers) Totals 345.00 0.00 0.00 Subtotal 345.00 GST 24.15 Total 369.15 SECTION 4B: Departmental Accounting
T sales journal: a jOllrJlai tlsed i1l departmclttalized aCC01tntillg to record all tll8 sales traNsactfollS for various departments The invoice shows the following information: • the seller’s and buyer’s names and addresses • the date of the invoice or sale • the terms of the invoice • the number of items sold, a description, and the unit costs • the total of each item sold and the department involved • the total amount of the sale This invoice is one example of the many different types available to departmentalized companies showing the different departments. The departments shown on this invoice are Stereo, TV, and VCR for White’s Electronic Supply Store. The transaction would read as follows: February I, 19xx Sold stereo equipment on account to Mindy Wright for $345 plus GST. Invoice No.215 Sales Journal A sales journal is used in departmental accounting to record all the sales transactions for various departments. It is important that managers are provided with as much data as possible to determine the gross profit for each department. In earlier modules, you worked with a special sales journal, but it had only one column serving a dual purpose. The purpose of that column was to debit the accounts receivable account and credit the sales account. The departmental sales journal, however, has a sales column for each department in the store and a column for the GST charged on each sale. This helps managers pinpoint various sales increases and decreases related to the departments within the store for decision-making purposes. SECTION 4B: Departmental Accounting 89
-0 o (f) tTl 9 o z … I:l:I t:J .g. ., ” l? ‘” ” [ ~ ” ” c .: ” ~ ~. Date I 19u 1 February 2 2 l 6 4 12 ” 28 20 28 21 22 SALES JOURNAL Accounts Account Debited Sale Post Receivable No. Ref. Debit Mindy Wright 215 369.15 Franklin’s Video World 216 1653.15 Tolman’s Appliance Celllre 217 1198.13 General TV Sales 218 2889.00 Mark’s Stereo Shop 233 207.31 Total 15943.96 -Page 12 Sales Credit GST Charged Stereo TV VCR on Sales 345.00 24.15 I 985.00 560.00 108.15 2 487.50 632.25 78.38 l 2700.00 189.00 4 ~ ‘”–: ——~ 193.75 13.56 ” 5265.65 7485.25 2150.00 1043.06 20 21 22 Z:=-:~;l o ::l 0 (t) ~ (1) …. l”D 0 (‘D 00 .-!–. _. W ~.-!-oo(D’ (‘[) ::r O’q en () (“D :;;::-……. o 00 (‘D 0 2″~::s~ (1). ::> a ‘” …., ‘” ::s ……. ::::r ………. ::::rgl”DQ’ (t) -t “Tj “‘1 f:ll ::s (t) ‘”Yj fr.e:…0″‘(‘D ::s. ‘”1 0″‘ I)q;l” …. ‘” “‘” . …. ‘” (1) ‘< .... o· t--o.,< ~ _. 0 .... ::>…., ::> < ~ '" 0 ::r' ........ t=j0 ('C oo·(\) () ~ ...., " 00 .... ~ ........ '" 7' (1) t::::::;:::..::s ('t) ...-,0:-'1'" 0..::3,< '" 0.. (1) ::> ‘< '" o..::;;l:'., '0 :1. g 3~s <~::? ~ 00' ;::t." -'.., (1) ::s ("0 oo~ Er'gtTj (\) .... -~ c.. ~ '" (\) ~ = 0.. d '" 0 ::> …… c _. a ~ ” “‘::r'(f) ;;J (l) C ~ :$:g ~~-< FIN 301 1. Look at the following sales invoice from White's Electronic Supply Store. TO: Sharon Slater 4743 -55 Ave. Edmonton, AB T6S2V2 IJhte's E:ectronic Supply Store l2 Fi.kJcrest Rooo Beoumont. Rbzrto TbR 2L3 DATE: February I, 19xx INVOICE: 215 TERMS OF SALE: 2/10, n/30 Quantity Description Unit Price Stereo TV VCR 1 TV. Model #4784 1099.00 1099.00 1 VCR. Model #3992 549.00 549.00 Totals 0.00 1099.00 549.00 Subtotal 1648.00 GST 115.36 Total 1763.36 Record the invoice on page 21 of the sales journal provided on the next page. o o SECTION 4B: Departmental Accounting 91 -0 IV gj B o z *'" t;I::I b ~ ., '< g '" " §: :» " " " '" " ~ ~. Date I 2 l • SALES JOURNAL Accounts Account Debited Sale Post Receivable No. Ref. Debit Page 21 Sales Credit GST Charged Stereo TV VCR on Sales I 2 l • ------- FIN 301 Posting from the Sales Journal Similar to posting from the purchases journal. amounts from the departmental sales journal are posted to the general ledger and accounts receivable subsidiary ledger. The day-to-day posting involves the posting of accounts receivable amounts to the subsidiary ledger accounts. The accounts receivable ledger for Mindy Wright is shown after the invoice has been posted to the ledger. Name Mindy Wright r 2 J • 5 Post Debit Date Item Ref. Debit Credit Balance 19xx 1 147.36 r Febrnary . 1 S12 369.15 516.51 2 J 4 5 Once all the posting is completed, the sales journal will look as shown on the next page. SECTION 4B: Departmental Accounting 93 ..g ~ (fJ t:rj 9 o z ... ~ t:l ~ ~ -. ~ '" :0 [ ::t. " 8 ~ :0 ~ ~. I 2 J 4 " 20 21 " Date 19« I Frbruary 2 6 12 28 28 Account Debited Sale No. Mindy Wright 215 Franklin's Video World 216 Tolman~Appliance Centre 217 General TV Sales 218 ~ ~ Mark s Stereo Shop 233 Total ,( SALES JOURNAL Page 12 Accounts Sales Credit GST Pos Receivable Charged Ref. Debit Stereo TV VCR on Sales ,( 369.15 345.00 24.15 I ,( 1653.15 985.00 560.00 108.15 2 ,( 1198.13 487.50 632.25 78.38 J ,( 2889.00 2700.00 189.00 4 ,( 207.31 193.75 13.56 " ,( 15943.96 5265.65 7485.25 2150.00 1043.06 20 (112) (411) (412) (413) (414) 21 "- FIN 301 A Note About Cash Receipts The cash receipts of a departmental business are the same as a typical business. No special columns are required, as the division ofthe items into departments is recorded in the sales journal. Part B has introduced you to the concept of departmental accounting. The recording of items in special columns and ledger accounts provides the company with detailed information as to sales and purchases, and provides a clearer financial picture of the business operation. FOLLOW-UP ACTIVITIES If you had difficulties understanding the concepts in the activities, it is recommended that you do the Extra Help. If you have a clear understanding of the concepts, it is recommended that you do the Enrichment. Extra Help When handling personal finances, people often divide their expenses into a form of budget, to make sure that they have money set aside for special occasions, and yet still have enough money to meet their regular expenses. This form of budgeting is a method of putting expenses into "departments" so that people can measure one against another. For instance, you may want to know exactly how much money you have spent on entertainment for the month, or on gasoline. Dividing your income in this manner helps to maintain control of what you earn, and allows you to make better decisions. In the world of business, income may be derived from many sources. Knowing which sources are the most profitable and when they are the most profitable also assists a business to determine where energies should be spent. If sales are already extremely high in a certain area, it may not be necessary to spend additional funds for advertising. The accurate recording of information relative to sales and purchases helps a business determine future goals, identify problem areas, and calculate the pricing structure of the items for sale. SECTION 4B: Departmental Accounting 95 1. The Toy Shop has three departments: Toys, Games, and Puzzles. Record the following transactions for November of the current year on page 11 of the sales journal. All sales are subject to 7% GST. Nov. 1 3 5 7 9 14 18 22 25 28 30 Sold toys on account to Cindy Ray, $56.00. Invoice No. 37 Sold toys ($345.00), games ($125.00), and puzzles ($89.50) on account to Phillip's Amusements Co. Invoice No. 35 Sold puzzles on account to Ray Williams, $32.50. Invoice No. 36 Sold puzzles on account to Jason Wine, $64.75. Invoice No. 37 Sold games on account to Susan Worth, $67.25. Invoice No. 38 Sold toys on account to Randy Kean, $34.00. Invoice No. 39 Sold games ($59.00) and puzzles ($78.50) on account to Heidi Johansson. Invoice No. 40 Sold toys ($456.70), puzzles ($124.00), and games ($205.50) on account to Barry Jacks. Invoice No. 41 Sold games worth $27.50 on account to Barb Rondy. Invoice No. 42 Sold puzzles on account to Garret Owns, $56.45. Invoice No. 43 Sold toys ($56.90) and puzzles ($34.50) on account to Jamie Cardinal. Invoice No. 44 96 SECTION 4B: Departmental Accounting N M ~ ~ . ~ 00 ~ " -" ~ . -'" l "0 ~ ~ ~ f--~~ ~ ~~ (J ~ C U 0 • ~ N N ~ "-~ 'a ~ ~ ~ U E • ~ ~ (J " ~ • >-0 f–…J « Z 11 ~ :0 a:: c ro .t! :l ~ >-” 0 .-~ 0 u ~O u <{ ~ ~ '" Vl UJ ...J « t:~ Vl ~'" ~ 0 ~Z "0 ~ ~ :0 ~ 0 ~ C ~ 0 U U <{ ~ 1ii 0 N M ~ ~ . ~ 00 ~ " -" ~ ~ 2. Total and rule the sales journal. 3. Post the special columns of the sales journal to the general ledger FIN 301 SECTION 4B: Departmental Accounting 97 Account Accounts Receivable Account No 111 Date Item P0" Debit Credit DR Balance Ref. CR I 19n 1 Nlll1tntlJtr DR 8362.50 I 2 2 l l • 4 S S Account Sales-Toys Account No. 411 Date Item PO$t Debit Credit DR Balance Ref. CR I J9u 1 CR 852.60 I Novtmbu 2 2 l ] • • S S Account Sales-Cames Account No 412 Date Item P~' Debit Credit DR Balance Ref. CR I 19u 1 CR 772.90 I November 2 2 l ] • 4 S S Account Sales-Puzzles Account No 413 Date Item P~, Debit Credit DR Balance Ref. CR I 19l1 1 CR 1154.60 I NOllt",IJtr 2 2 ] ] 4 • S S Account CST Charged on Sales Account No. 414 Date Item PO$t Debit Credit DR Balance ReI. CR I J9u 1 CR 585.38 I Novembtr 2 2 ] ] • 4 S S Compare your responses with those in the Appendix, Section 48: Extra Help. 98 SECTION 4B: Departmental Accounting FIN 301 . Enrichment· 1. Contact a business in your area and inquire as to the methods they use to categorize their sales. You might wish to contact a local grocery store, department store, or fast food restaurant. Include the following questions in your inquiry. • Does the business use any form of technology to keep their records? If so, what does the business use? • Are different codes used to classify the items as they are sold? • How is GST accounted for in the records? • How does the business record sales returns or purchases returns? Use the information that you obtained to write a report. 2. Louis laMarr has just opened a new coffee bar, where he will be selling coffees, desserts, and light lunches. He has decided to categorize his sales in one large account to save time for the clerks. He has asked you for advice. What would you suggest? Compare your responses with those in the Appendix, Section 48: Enrichment. CONCLUSION As a business grows and changes, it may expand from one employee to many employees. The business may also expand its product line, moving from the manufacture, sales and service of one item, to a variety of products and services. Keeping accurate accounting records of where the money is coming in and where the money is going out is crucial if the business is to be successful. In Part B the departmentalized accounting system was introduced. This system varies from business to business, depending on the needs of the company, but all forms of departmentalized accounting systems share the same concept: dividing the revenues and corresponding expenses into departments that can be analysed. The use of computer technology has greatly increased the ability of a business to departmentalize its accounting procedures to determine the costs associated with particular areas. Generally, the more detailed information that is available to a business, the more successful that business will be in maintaining and increasing sales. ASSIGNMENT Turn to your Assignment Booklet and do the assignment for Section 4 Part B. SECTION 4B: Departmental Accounting 99 Congratulations! You have completed one of the more challenging modules in Financial Management. Advanced Accounting has introduced you to a variety of accounting concepts used by many businesses, and one of the final specialty sections: manufacturing or departmental accounting. It is hoped that you will continue in the advanced level modules for an in-depth study of financial management. 100 SECTION 4B: Departmental Accounting

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