Project 1

Investment
Ato alemu deposited $2,000 at awash bank for 10 years with a 7% annual interest rate
compounded monthly.

Ato alemu invested $2,000 annually at 9% earning pre year what is the accumulated amount
after 10 years

Project 2
ABC Company Financials:
Raw Materials and Costs:
Raw material purchased:……………………………………………………………. $25,000,000
Directcosts: …………………………………………………..……………………..$10,000,000
Factory overhead:………………………………………………………………….. $7,000,000
Selling and administration: …………………………………………………………..$2,000,000
Additional information
Raw materials used in production: …….75 % of purchased materials
Work in progress: ………………………….60% completed
Completed jobs sold ……………………….80%
REQUIRED

Calculate the ending

1. raw materials.
2. WIP
3. FG

Calculate

1. CGS
2. SELLING AND ADMINISTRATIVE EXPENSE
Project 3

Accounts Receivable:
ABC Company has ACCEPTED a note for birr 40,000 on march 12 it issuance day and due in
60 days.

Required

1. What is the maturity date?

2. What is its maturity value
3. Record the issuance and maturity transaction.

Project 4:

Inventory Calculations:
ABC Company has the following inventory details for January:

Jan 1 Beginning inventory: 200 units @ 9 birr each

Purchases: 300 units @ $10 birr(January1)

Sales: 200 units @ $20 birr(January 7)

purchases: 100 units @ $11 birr (January 13)

Sales: 150 units @ $21 birr(January 15)

purchases: 100 units @ $12 birr (January 20)

Sales: 100 units @ $22 each (January 31)

On physical count inventory on hand 250 units . company uses periodic inventory system and
FIFO costing method and all sale and purchase are on account.

Required

1.recored the transaction

2.calculate the gross profit

Project 5:
1. Identify the relevant documents for declarations of tax
2. Role of national bank
3. Types of accounts
4. List financial intermediaries other than bank
5. What is financial market and its importance

Project 6

Gain Calculation:
A company purchased a computer for $100,000 and sold it for $75,000. The total depreciation
amounted to $50,000.

1. What is the book value

2. What is the gain amount
3.

PROJECT 7
MDF Manufacturing PLC imported materials 2,500,000.00 and purchased local materials of Birr
1,000,000.00 before VAT for production of gloves in 2014.The local customs duty charges are
Br. 200,000.00 paid to tax authority. The factory sells 30,000.00 gloves at Br.150.00 each before
VAT including 2% sales commission, the company paid 53,000.00 administration expenses and
employment income tax of Br. 30,000.00. Imported Materials are exempted from VAT and
Withholding Tax. Business Profit tax is 30%.
Task 1.1: Calculate Net Profit.
Task 1.2: Calculate Direct and Indirect Tax.
Task 1.3: Identify relevant documents for taxation.
PROJECT 8
Case Scenario 1: Equipment Purchase and Depreciation

Background: ABC Company purchased equipment worth $100,000 on January 1, 2011. The
company uses the straight-line method for depreciation. The accounting period is from January 1
to December 31 each year. A professional valuator has revalued the equipment at Birr 70,000.

Tasks:

Task 1: Initial Recognition of the Asset

 Show the journal entry to record the initial acquisition of the equipment.

Task 2: Depreciation Calculation and Journal Entries

 Calculate the annual depreciation expense using the straight-line method.

 Record the journal entries for depreciation expenses for the years 2011, 2012, 2013, and
2014.
 Determine the net book value of the equipment to be included in the balance sheet for the
years 2012, 2013, and 2014.

Task 3: Revaluation Surplus/Deficit

 Compute the revaluation surplus or deficit as of January 1, 2014.

 Pass the necessary journal entry to reflect the revaluation in the accounting records.

Case Scenario 2: Import of Spare Parts

Background: Zufan Trading imports spare parts from Japan to assemble Bajaj vehicles in Addis
Ababa. The transaction details are as follows:

 Cost of spare parts: $500,000 (as of May 10, 2017)

 Transportation charges: 100,000 Birr
 Insurance: 20,000 Birr
 Exchange rate (May 10, 2017): 1 USD = 25 Birr
Tasks:

Task 1: Cost of Raw Materials

 Calculate the cost of spare parts in Birr before including transportation charges.

Task 2: Tax and Duty Calculations

 Determine the excise tax (30%) on the cost of raw materials before transportation
charges.
 Calculate the VAT (15%) on the cost of raw materials before transportation charges.
 Compute the customs duty (35%) on the cost of raw materials before transportation
charges.

Additional Information:

 The liabilities for excise tax, VAT, and customs duty are calculated based on the cost of
raw materials before transportation charges.
ANSWER FOR CODE 5

Project 1: Investment

 Part 1: Compounded Monthly Deposit

o Formula for Future Value (FV) with compound interest: FV = P * (1 + r/n)^(n*t)
o P = Principal = $2,000
o r = Annual interest rate = 7% = 0.07
o n = Compounding periods per year = 12 (monthly)
o t = Time in years = 10
o FV = 2000 * (1 + 0.07/12)^(12*10)
o FV = 2000 * (1 + 0.0058333...)^(120)
o FV = 2000 * (1.0058333...)^120
o FV = 2000 * 2.0096608
o FV ≈ $4,019.32
 Part 2: Annual Investment (Annuity)
o Formula for Future Value of an Ordinary Annuity: FV = Pmt * [((1 + r)^t - 1) / r]
o Pmt = Annual Payment = $2,000
o r = Annual interest rate = 9% = 0.09
o t = Time in years = 10
o FV = 2000 * [((1 + 0.09)^10 - 1) / 0.09]
o FV = 2000 * [(1.09)^10 - 1] / 0.09
o FV = 2000 * [2.367363675 - 1] / 0.09
o FV = 2000 * [1.367363675] / 0.09
o FV = 2000 * 15.1929297
o FV ≈ $30,385.86

Project 2: ABC Company Financials (Cost Accounting)

Given:

 Raw Material Purchased: $25,000,000

 Direct Costs (Assuming Direct Labor): $10,000,000
 Factory Overhead: $7,000,000
 Selling & Admin: $2,000,000
 RM Used = 75% of Purchased
 Ending WIP = 60% completed (Interpreted as 60% of costs incurred remain in WIP)
 FG Sold = 80% of Completed Jobs

Calculations:
 1. Raw Materials Used (Direct Materials):
o 0.75 * $25,000,000 = $18,750,000
2. Ending Raw Materials:
o Purchased - Used = $25,000,000 -
18,750,000=∗∗18,750,000=∗∗

6,250,000 (Answer 1)**

3. Total Manufacturing Costs (TMC) incurred during the period:

o Direct Materials Used + Direct Labor + Factory Overhead
o $18,750,000 + $10,000,000 + $7,000,000 = $35,750,000
4. Ending Work In Process (WIP):
o (Assuming 60% of TMC incurred remains in WIP, and Beg WIP = 0)
o 0.60 *
35,750,000=∗∗35,750,000=∗∗

21,450,000 (Answer 2)**

o Note: This interpretation of "60% completed" applied to ending WIP value is an

assumption based on the limited information.
5. Cost of Goods Manufactured (COGM):
o (Assuming Beg WIP = 0) COGM = TMC - Ending WIP
o $35,750,000 - $21,450,000 = $14,300,000
6. Cost of Goods Sold (COGS):
o 80% of COGM = 0.80 *
14,300,000=∗∗14,300,000=∗∗

11,440,000 (Answer for CGS)**

7. Ending Finished Goods (FG):

o COGM - COGS = $14,300,000 -
11,440,000=∗∗11,440,000=∗∗

2,860,000 (Answer 3)**

8. Selling and Administrative Expense:

o Given directly = $2,000,000 (Answer for S&A)

Project 3: Accounts Receivable (Note)

Given:
  Note Accepted: March 12
 Face Value: Birr 40,000
 Term: 60 days
 Interest Rate: Missing! Cannot calculate Maturity Value accurately. We will assume an 8%
annual interest rate for demonstration.

Required:

1. Maturity Date:
o Days in March: 31 - 12 = 19 days
o Days needed from April: 60 - 19 = 41 days. April has 30 days.
o Days remaining from April: 30 days
o Days needed from May: 41 - 30 = 11 days
o Maturity Date = May 11
2. Maturity Value (Assuming 8% Annual Interest):
o Interest = Principal * Rate * Time
o Interest = 40,000 * 0.08 * (60/360) Using 360 days for calculation
o Interest = 40,000 * 0.08 / 6 = 3200 / 6 ≈ 533.33 Birr
o Maturity Value = Face Value + Interest
o Maturity Value = 40,000 + 533.33 = Birr 40,533.33 (Based on assumed 8% rate)
3. Record Transactions (Assuming 8% rate & note received for A/R):
o March 12 (Issuance):
 Dr. Notes Receivable 40,000.00
 Cr. Accounts Receivable 40,000.00
 (To record acceptance of note in exchange for account receivable)
o May 11 (Maturity - Assuming Collection):
 Dr. Cash 40,533.33
 Cr. Notes Receivable 40,000.00
 Cr. Interest Revenue 533.33
 (To record collection of note receivable and interest earned)

Project 4: Inventory Calculations (Periodic FIFO)

Required:

1. Record Transactions:
o Jan 1 Purchase:
 Dr. Purchases (300 * 10) 3,000
 Cr. Accounts Payable 3,000
o Jan 7 Sale:
  Dr. Accounts Receivable (200 * 20) 4,000
 Cr. Sales Revenue 4,000
o Jan 13 Purchase:
 Dr. Purchases (100 * 11) 1,100
 Cr. Accounts Payable 1,100
o Jan 15 Sale:
 Dr. Accounts Receivable (150 * 21) 3,150
 Cr. Sales Revenue 3,150
o Jan 20 Purchase:
 Dr. Purchases (100 * 12) 1,200
 Cr. Accounts Payable 1,200
o Jan 31 Sale:
 Dr. Accounts Receivable (100 * 22) 2,200
 Cr. Sales Revenue 2,200
2. Calculate Gross Profit:
o Total Sales Revenue: 4,000 + 3,150 + 2,200 = Birr 9,350
o Calculate Cost of Goods Sold (COGS) - Periodic FIFO:
 Goods Available for Sale (Cost):
 Beg Inv (200 @ 9) = 1,800
 Jan 1 Purch (300 @ 10) = 3,000
 Jan 13 Purch (100 @ 11) = 1,100
 Jan 20 Purch (100 @ 12) = 1,200
 Total GAFS Cost = 1800 + 3000 + 1100 + 1200 = Birr 7,100
 Total GAFS Units = 200 + 300 + 100 + 100 = 700 units
 Ending Inventory (Cost - FIFO): Physical count = 250 units. These are
the last units purchased.
 100 units @ 12 (from Jan 20) = 1,200
 100 units @ 11 (from Jan 13) = 1,100
 50 units @ 10 (from Jan 1) = 500
 Total Ending Inventory Cost = 1200 + 1100 + 500 = Birr 2,800
 COGS = GAFS Cost - Ending Inventory Cost
 COGS = 7,100 - 2,800 = Birr 4,300
o Gross Profit = Total Sales Revenue - COGS
o Gross Profit = 9,350 - 4,300 = Birr 5,050

Project 5: General Finance/Tax/Banking Questions

1. Relevant Documents for Tax Declarations (Ethiopia):

o Taxpayer Identification Number (TIN) Certificate
 o Financial Statements (Income Statement, Balance Sheet)
o VAT Declaration Forms (if registered)
o Withholding Tax Declaration Forms (Payments & Receipts)
o Payroll Tax Summaries/Declarations
o Customs Declaration Documents (for imports/exports)
o Sales and Purchase Registers/Invoices
o Bank Statements
o Profit Tax Declaration Form
2. Role of National Bank of Ethiopia (NBE):
o Monetary Policy: Control inflation and money supply, set interest rates.
o Banking Regulation & Supervision: License, regulate, and oversee commercial
banks and financial institutions.
o Currency Issuance: Issue and manage the national currency (Birr).
o Banker to Government: Manage government accounts and debt.
o Foreign Exchange Management: Manage foreign reserves and regulate foreign
exchange transactions.
o Financial Stability: Maintain the stability and soundness of the financial system.
3. Types of Accounts (General Accounting):
o Asset Accounts: Resources owned by the company (e.g., Cash, Accounts
Receivable, Inventory, Prepaid Expenses, Equipment, Buildings, Land).
o Liability Accounts: Obligations owed to others (e.g., Accounts Payable, Salaries
Payable, Notes Payable, Unearned Revenue, Loans Payable).
o Equity Accounts: Owner's claim on assets (e.g., Capital Stock/Common Stock,
Retained Earnings, Dividends/Drawings).
o Revenue Accounts: Income earned from operations (e.g., Sales Revenue, Service
Revenue, Interest Revenue).
o Expense Accounts: Costs incurred to generate revenue (e.g., Cost of Goods Sold,
Salary Expense, Rent Expense, Utilities Expense, Depreciation Expense, Interest
Expense).
4. Financial Intermediaries (Other than Banks):
o Insurance Companies
o Pension Funds
o Mutual Funds / Investment Companies
o Microfinance Institutions (MFIs)
o Savings and Credit Cooperatives (SACCOs) / Credit Unions
o Investment Banks
o Brokerage Firms
o Leasing Companies
5. Financial Market and its Importance:
o Definition: A market where financial securities (like stocks, bonds, currencies,
derivatives) can be bought and sold at prices reflecting supply and demand.
 o Importance:
 Capital Allocation: Channels funds from savers/investors to
businesses/governments needing capital for investment and growth.
 Price Discovery: Determines the prices of financial assets through
buyer/seller interaction.
 Liquidity: Provides a mechanism for investors to buy and sell financial
assets easily.
 Risk Sharing/Transfer: Allows entities to manage risk through instruments
like insurance or derivatives.
 Efficiency: Facilitates transactions and reduces the cost of
borrowing/lending, improving overall economic efficiency.

Project 6: Gain/Loss Calculation

Given:

 Cost of Computer: $100,000

 Selling Price: $75,000
 Accumulated Depreciation: $50,000

Calculations:

1. Book Value:
o Book Value = Original Cost - Accumulated Depreciation
o Book Value = $100,000 -
50,000=∗∗50,000=∗∗

50,000**

2. Gain Amount:
o Gain/(Loss) = Selling Price - Book Value
o Gain/(Loss) = $75,000 -
50,000=∗∗50,000=∗∗

25,000 (Gain)**

PROJECT 7: MDF Manufacturing PLC

Given:

 Imported Materials Cost: 2,500,000

  Local Materials Purchased (Before VAT): 1,000,000
 Customs Duty Paid: 200,000
 Gloves Sold: 30,000 units @ 150 each (Before VAT)
 Sales Commission: 2% of Sales
 Admin Expenses: 53,000
 Employment Income Tax Paid: 30,000
 Imported Materials Exempt VAT/WHT
 Business Profit Tax Rate: 30%
 VAT Rate (Assumed Standard): 15%

Task 1.1: Calculate Net Profit

1. Sales Revenue: 30,000 * 150 = 4,500,000

2. Cost of Goods Sold (COGS): Assumption: COGS includes materials used and customs
duty. Direct Labor and MOH are missing.
o Materials Used (Assuming all purchased) = Imported + Local = 2,500,000 +
1,000,000 = 3,500,000
o COGS ≈ Materials Used + Customs Duty = 3,500,000 + 200,000 = 3,700,000 (State
assumption about missing costs)
3. Gross Profit: Sales - COGS = 4,500,000 - 3,700,000 = 800,000
4. Operating Expenses:
o Sales Commission = 4,500,000 * 0.02 = 90,000
o Admin Expenses = 53,000
o Total Operating Expenses = 90,000 + 53,000 = 143,000
5. Profit Before Tax (PBT): Gross Profit - Operating Expenses = 800,000 - 143,000 = 657,000
6. Business Profit Tax: PBT * 30% = 657,000 * 0.30 = 197,100
7. Net Profit: PBT - Business Profit Tax = 657,000 - 197,100 = Birr 459,900

Task 1.2: Calculate Direct and Indirect Tax

 Direct Tax:
o Business Profit Tax = 197,100
o Employment Income Tax (Paid by company) = 30,000
o Total Direct Tax = 197,100 + 30,000 = Birr 227,100
 Indirect Tax:
o Customs Duty = 200,000
o VAT Payable:
 Output VAT (on Sales) = 4,500,000 * 15% = 675,000
 Input VAT (on Local Purchase) = 1,000,000 * 15% = 150,000 (Assuming
reclaimable)
 Net VAT Payable = Output VAT - Input VAT = 675,000 - 150,000 = 525,000
 o Total Indirect Tax = 200,000 (Duty) + 525,000 (VAT) = Birr 725,000

Task 1.3: Identify Relevant Documents for Taxation

* See Project 5, Question 1. Add specific import/customs documents (e.g., Commercial Invoice, Bill
of Lading, Customs Declaration forms).

PROJECT 8

Case Scenario 1: Equipment Purchase and Depreciation

Given:

 Equipment Cost: $100,000 (Jan 1, 2011)

 Method: Straight-line
 Revaluation (as of Jan 1, 2014? Implied): Birr 70,000
 Missing: Useful Life, Salvage Value. Assume 10 years useful life, 0 salvage value for
demonstration.

Task 1: Initial Recognition

 Jan 1, 2011:
o Dr. Equipment 100,000
o Cr. Cash / Accounts Payable 100,000

Task 2: Depreciation Calculation and Journal Entries

 Annual Depreciation: (100,000 - 0) / 10 = $10,000 per year (Based on assumption)

 Journal Entries (End of each year):
o Dec 31, 2011: Dr. Depreciation Expense 10,000; Cr. Accumulated Depreciation -
Equipment 10,000
o Dec 31, 2012: Dr. Depreciation Expense 10,000; Cr. Accumulated Depreciation -
Equipment 10,000
o Dec 31, 2013: Dr. Depreciation Expense 10,000; Cr. Accumulated Depreciation -
Equipment 10,000
o Dec 31, 2014: Dr. Depreciation Expense 10,000; Cr. Accumulated Depreciation -
Equipment 10,000
 Net Book Value (NBV):
o Dec 31, 2012: Cost (100,000) - Acc Dep (10k+10k) = $80,000
o Dec 31, 2013: Cost (100,000) - Acc Dep (10k+10k+10k) = $70,000
o Dec 31, 2014: Cost (100,000) - Acc Dep (10k+10k+10k+10k) = $60,000

Task 3: Revaluation Surplus/Deficit (as of Jan 1, 2014)

  NBV at Jan 1, 2014 (same as Dec 31, 2013): $70,000
 Accumulated Depreciation at Jan 1, 2014: $30,000 (for 2011, 2012, 2013)
 Revalued Amount: $70,000 (Assuming currency is same or conversion negligible for this
step)
 Revaluation Surplus/Deficit: Revalued Amount - NBV = $70,000 -
70,000=∗∗70,000=∗∗

0**

 Journal Entry for Revaluation (Standard Method):

o Step 1: Eliminate Accumulated Depreciation against the Asset Cost.
 Dr. Accumulated Depreciation - Equipment 30,000
 Cr. Equipment 30,000
(This resets the book value to $70,000 gross, $0 Acc Dep)
o Step 2: Adjust the asset's carrying amount to the revalued amount. Since the NBV (
70�)�������ℎ���������������(70k)equalsthe
revaluedamount(

70k), no further adjustment or recognition of surplus/deficit is needed in this specific

case.

o Net Effect Entry: Only the elimination of accumulated depreciation is recorded:

 Dr. Accumulated Depreciation - Equipment 30,000
 Cr. Equipment 30,000

Case Scenario 2: Import of Spare Parts

Given:

 Cost of Spare Parts: $500,000 (May 10, 2017)

 Exchange Rate: 1 USD = 25 Birr
 Transportation: 100,000 Birr
 Insurance: 20,000 Birr
 Customs Duty: 35%
 Excise Tax: 30%
 VAT: 15%
 Calculation Base: Cost of raw materials before transportation charges. (Interpreted as
sequential calculation starting with FOB cost).

Task 1: Cost of Raw Materials (in Birr, before transport)

 Cost = $500,000 * 25 Birr/USD = 12,500,000 Birr

Task 2: Tax and Duty Calculations (Sequential Method)

1. Cost Base (FOB): 12,500,000 Birr

2. Customs Duty (35%): 12,500,000 * 0.35 = 4,375,000 Birr
3. Cost + Duty: 12,500,000 + 4,375,000 = 16,875,000 Birr
4. Excise Tax (30% on Cost + Duty): 16,875,000 * 0.30 = 5,062,500 Birr
5. Cost + Duty + Excise: 16,875,000 + 5,062,500 = 21,937,500 Birr
6. VAT (15% on Cost + Duty + Excise): 21,937,500 * 0.15 = 3,290,625 Birr