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Fundamentals of Accounting 2 group ass

This document outlines a group assignment for the Fundamentals of Accounting II course at Jimma University, focusing on various accounting concepts and practical exercises. Students are instructed to work in groups of up to five members, avoid plagiarism, and submit their work by the final examination date. The assignment includes conceptual questions about inventories, depreciation, intangible assets, and practical workout questions related to depreciation calculations and payroll processing.

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Tuge Ali
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16 views

Fundamentals of Accounting 2 group ass

This document outlines a group assignment for the Fundamentals of Accounting II course at Jimma University, focusing on various accounting concepts and practical exercises. Students are instructed to work in groups of up to five members, avoid plagiarism, and submit their work by the final examination date. The assignment includes conceptual questions about inventories, depreciation, intangible assets, and practical workout questions related to depreciation calculations and payroll processing.

Uploaded by

Tuge Ali
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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JIMMA UNIVERSITY

Department of Accounting and Finance


Course: Fundamentals of Accounting II (Acfn 2012)
Instructor Getachew Ali

This is a group assignment, which helps you to understand the subject very well. You are
requested to address according to the guideline listed below.
Guidelines/Instruction:
 Number of Group Member has to be not more than five
 Copying from others invalidates your work,
 Show all the necessary steps for workout questions,
 Submit at the end of this course final examination date.
 Write down full name of member with their identity card number
 Weight 20%

Conceptual Questions:
1. What is the nature and purpose of inventories in accounting?
2. Explain how inventory errors can affect financial statements.
3. What are the different inventory cost flow assumptions (FIFO, LIFO, and weighted
average)? How does each assumption impact the cost of goods sold and ending
inventory?
4. What circumstances might lead to valuing inventory at lower of cost or net realizable
value (LCNRV)? How is LCNRV determined?
5. Why is depreciation necessary for PPE? Explain the difference between straight-line
depreciation and declining balance depreciation.
6. How are intangible assets recognized and measured upon acquisition?
7. What are natural resources, and how are they different from other assets? How are natural
resources recognized and measured?
Workout questions
1. Serbo Company purchased a delivery truck for $30,000 on January 1; 2010.The truck has an
expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated
useful life of 8 years. Actual miles driven were 15,000 in 2010 and 12,000 in 2011.
Required:
(a) Compute depreciation expense for 2010 and 2011 using (1) the straight-line method, (2) the
units-of-activity method, and (3) the double-declining balance method.
(b) Assume that Serbo uses the straight-line method.
i. Prepare the journal entry to record 2010 depreciation.
ii. Show how the truck would be reported in the December 31, 2010, balance sheet.
2. On January 1, 2010, the XYZ Company ledger shows Equipment $29,000 and Accumulated
Depreciation $9,000. The depreciation resulted from using the straight-line method with a useful
life of 10 years and salvage value of $2,000. On this date, the company concludes that the
equipment has a remaining useful life of only 4 years with the same salvage value.
Required:
a) Compute the revised annual depreciation?
b) What is the journal entry to correct prior years’ depreciation expense?
c) Prepare the journal entry to record for the current and future year’s annual
depreciation?
3. ABC Company sells office equipment on September 30, 2010, for $20,000 cash. The office
equipment originally cost $72,000 and as of January 1, 2010, had accumulated depreciation of
$42,000. Depreciation for the first 9 months of 2010 is $5,250.
Required:
a) Prepare the journal entries to update depreciation to September 30, 2010, and
b) record the sale of the equipment.
4. A mining company extracts oil from an oil field. The field has an estimated total recoverable
volume of 1,000,000 barrels. In the first year, the company extracts 50,000 barrels. The cost of
acquiring the oil field was $2,000,000.
Required:
a) Calculate the depletion expense for the first year using the units-of-production method.
b) How would the depletion expense change if the company used the straight-line method
instead?
5. Chilalo Retail Enterprise, a government owned business, pays its employees’ salaries
according to the Ethiopian calendar Month. The following data relate to the month of Meskerem,
2013 E.C.

S.No Employee Name Basic Salary


001 Animut Anley birr 2500
002 Nebiyat Girma 1880
003 Erecha Megersa 1790
004 Bekuretsion G/Tensae 1565
Additional information
1. All workers are expected to work 40 hours per week and during Meskerem there are 4
weeks. The workers have done as they have been expected.
2. Nebiyat Girma has worked 10 hours of overtime during Meskerem: 3 hours during
‘Meskel’ and the other 7 hours before 10 p.m.
3. Erecha Megersa has also worked 5 hours of overtime: 2 hours during weekly rest
days and 3 hours between 10 p.m. – 6 a.m.
4. Animut and Nebiyat received a monthly position allowance of br. 350 and br 300
respectively which are both taxable.
5. Animut Anley agreed to have a monthly deduction of br. 250 for credit association.
6. All workers are permanent except Bekuretsion G/Tesnae.
Required:
A. Compute the total deductions and net pay for each employee.
B. Prepare a Payroll Register (or Sheet) for the Retail Enterprise for the month of Meskerem
30, 2013.
C. Compute (calculate) the total:
I. Withholding Taxes
II. Payroll Tax
III. Record the payment of salary as of Meskerem 30, 2013.
D. Pass the entry to pay the withholding taxes to the appropriate government unit.

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