problem 1) Part A
Bank column of Cash Book reported a balance of Rs114, 800 as at 31 October 2011. On comparing the entries with those in the bank statements the following have been identified:
I. Rs750 paid for electricity by direct debit and Rs 300 taken by bank as bank charges have not been recorded in the Cash Book.
II. Cheques drawn to total amount of Rs 47,500, in the name of suppliers, were not presented to the bank until after this date.
III. A cheque drawn for Rs 235,000, in payment of a supplier, Smack Ltd, has been entered in the Cash Book as Rs 325,000.
IV. Bank lodgements amounting to Rs 39,450 didn’t clear until after this date.
V. The balance as per bank statement was Rs 211,800
a) Identify the adjusted bank balance in the business records as at 31 October 2011.
b) Create a bank reconciliation statement as at that date.
The following information is provided for Mary & Co Ltd producing a single product:
Rs per Unit
Selling price 60.00
Variable production cost 12.00
Variable selling cost 4.00
Fixed production cost 40
Fixed selling cost 8.00
Budgeted production and sales for the year is estimated to be 10,000 units. Required:
a) Compute the breakeven point for Mary & Co Ltd (to the nearest whole unit).
b) If the variable production cost per unit and selling price per unit is expected to increase by 10% and the fixed production costs to increase by 25%. Compute the new breakeven point to the nearest whole unit).
Distinguish between capital expenditure and revenue expenditure, describing the important criteria which make the differences possible.