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Accounting - Case study - departmental profit and loss statement

Case study - Departmental Profit and Loss statement

Interactive SWF

Welcome to Media World. This business sells DVD players (DVDs) and
Television sets (TVs).

At the beginning of November Media World have the following assets and


* stock $6000

* prepaid rent $1000

* workshop equipment $36 000

* land and buildings $180 000


* bank overdraft $10 000

* accrued wages $700

* loan $40 000

* accumulated depreciation on workshop equipment is $3000

You have to determine capital at 1 November.

* Media World sells DVDs and TVs. Workshop equipment is only involved in
repairing TVs, service costs are only for the DVDs


* Media World employs three sales staff, who spend two-thirds of their
time selling DVDs and one-third selling TVs. Two other people work at
repairing TVs and another person works in servicing. There are two staff
members employed in the office

* the business has four cost centres: sales, workshop, office and finance

* each person employed by Media World is paid $100 per day and works a
five day week. The prepaid and accrued expenses must be reversed for each

* the calendar for November is shown below. Dates shown in bold are the
days on which staff are paid. Staff do not work on Monday and Tuesday as
Media World operates in a tourist area and these are quiet days. They do
work on weekends

* workshop equipment is depreciated at 12% per annum on cost

* interest is paid annually in December. It is $1200 for the year on the
Bank overdraft and $3600 for the year for the loan

* rent is $3000 per month and is allocated in equal proportions to sales,
workshop and office

* advertising is allocated according to sales

* cash sales are 40% of total sales. Cash sales are $20 000 for the DVD
players and $10 000 for TVs

* there is a mark up of 100% on all goods sold

* stock loss is $500 (all DVDs)

* bad debts are $1000

* at the end of November prepaid rent is $600

* you will have to calculate accrued wages at 30 November

Other expenses include:

* advertising is $3000

* service costs are $1000

* cleaning $2000

View the text document for solution to Study case - Departmental Profit
and Loss statement.

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