SOLUTION FOR CHAPTER 6

Exercise 1:
1. Put in the warehouse 150,000 product A with total value of 15,750,000
Dr Ac 155 15,750,000
Cr Ac 154 15,750,000
2. Sold to company X: 50,000 product A. MK received Credit note from bank: 6,600,000
(including VAT rate 10%)
+ Dr Ac 112 6,600,000
Cr Ac 511 6,000,000
Cr Ac 3331 600,000
+ Dr Ac 632 50,000 * 100 = 5,000,000
Cr Ac 155 5,000,000
3. Sold to company K 40,000 products and received credit notes from bank with value of
5,280,000 (Including VAT rate of 10%)
+ Dr Ac 112 5,280,000
Cr Ac 511 4,800,000
Cr Ac 3331 480,000
+ Dr Ac 632 4,000,000
Cr Ac 155 4,000,000
4. Sold on credit to company Z 30,000 product A. Z Co. accepted payment. (price before
VAT: 120)
+ Dr Ac 131 (co. Z) 3,960,000
Cr Ac 511 3,600,000
Cr Ac 3331 360,000
+ Dr Ac 632 10,000 * 100 + 20,000*(15,750/150,000) = 3,100,000
Cr Ac 155 3,100,000
5. Sold in cash for company H 60,000 product A at price of 120 (excluding of VAT).
+ Dr Ac 111 7,920,000
Cr Ac 511 7,200,000
Cr Ac 3331 720,000
+ Dr Ac 632 6,300,000
Cr Ac 155 6,300,000
6. H Co. only received 55,000 goods from company H, the remaining products were
returned to company A (No entry)
7. The company received and put returned goods into warehouse. Bank transfer has been
made to customer.
+ Dr Ac 521 600,000
Dr Ac 3331 60,000
Cr Ac 112 660,000
+ Dr Ac 155 525,000
Cr Ac 632 525,000
8. Selling expenses incurred: 150,000
Dr Ac 641 150,000
 Cr related ac. 150,000
9. Administrative expenses incurred: 200,000
Dr Ac 642 200,000
Cr related ac. 200,000
10. Financial income incurred: 300,000
Dr related ac. 300,000
Cr Ac 515 300,000
11. Financial expenses incurred 150,000
Dr Ac 635 150,000
Cr related Ac. 150,000
12. Calculate business result in December year N.
a. Transfer revenue deduction to define net revenue
Dr Ac 511 600,000
Cr Ac 521 600,000
 Net revenue = 6,000,000 + 4,800,000 + 3,600,000 + 7,200,000 – 600,000
= 21,000,000
b. Transfer net revenue to calculate business result:
Dr Ac 511 21,000,000
Cr Ac 911 21,000,000
c. COGS = 5,000,000 + 4,000,000 + 3,100,000 + 6,300,000 – 525,000 = 17,875,000
Transfer COGS to calculate business result:
Dr Ac 911 17,875,000
Cr Ac 632 17,875,000
d. Transfer selling expenses to calculate business result:
Dr Ac 911 150,000
Cr Ac 641 150,000
e. Transfer administrative expenses to calculate business result:
Dr Ac 911 200,000
Cr Ac 642 200,000
f. Transfer finance income to calculate business result:
Dr Ac 515 300,000
Cr Ac 911 300,000
g. Transfer finance expenses to calculate business result:
Dr Ac 911 150,000
Cr Ac 635 150,000
h. Calculate PBT:
PBT = (21,000,000 – 17,875,000) – 150,000 – 200,000 + 300,000 – 150,000
= 2,925,000
i. Calculate CIT expense:
CIT expense = 2,925,000 * 20% = 585,000
Dr Ac 8211 585,000
Cr Ac 3334 585,000
j. Transfer CIT expense to calculate business result:
Dr Ac 911 585,000
Cr Ac 8211 585,000
k. Calculate PAT
 PAT = 2,925,000 – 585,000 = 2,340,000
Dr Ac 911 2,340,000
Cr Ac 4212 2,340,000

Exercise 2:
1. Direct material cost incurred: 500,000
Dr Ac 621 500,000
Cr Ac 152, 331.. 500,000
2. Direct labor cost incurred: 220,000
Dr Ac 622 220,000
Cr Ac 334,338,335 220,000
3. Manufacturing overhead cost: 300,000
Dr Ac 627 300,000
Cr related ac. 300,000
4. Production result is as follows:
- Transfer production expenses to calculate COFG:
Dr Ac 154 1,020,000
Cr Ac 621 500,000
Cr Ac 622 220,000
Cr Ac 627 300,000
- COFG = 130,000 + 1,020,000 – 161,000 = 989,000
COFG per unit = 989,000/1,900 = 520.5 per unit
Dr Ac 155 800 * 520.5 = 416,421
Dr Ac 632 500 * 520.5 = 260,263
Dr Ac 157 600 * 520.5 = 312,316
Cr Ac 154 989,000
Revenue from direct sale:
Dr Ac 131 (co. T) 550,000
Cr Ac 511 500,000
Cr Ac 3331 50,000
Sent out from the warehouse to K Co.: 300 products, price before VAT: 1,000/products. The
company received credit note from bank for this payment.
AVCO of product A = (100,000 + 989,000)/(200 + 1,900) = 518.6
+ Dr Ac 632 518.6 * 300 = 155,580
Cr Ac 155 155,580
+ Dr Ac 112 330,000
Cr Ac 511 300,000
Cr Ac 3331 30,000
5. Selling expenses incurred: 30,000
Dr Ac 641 30,000
Cr related ac 30,000
6. Administrative expenses incurred: 100,000
Dr Ac 642 100,000
Cr related ac 100,000
7. Financial expenses incurred: 50,000
Dr Ac 635 50,000
 Cr related ac 50,000
8. Financial income incurred: 150,000
Dr related ac. 150,000
Cr Ac 515 150,000
9. Calculate business result, corporate income tax and profit after tax in quarter II/N:

a. Transfer net revenue to calculate business result:

Dr Ac 511 500,000 + 300,000 = 800,000
Cr Ac 911 800,000
b. COGS = 260,263 + 155,580 = 415,843
Transfer COGS to calculate business result:
Dr Ac 911 415,843
Cr Ac 632 415,843
c. Transfer selling expenses to calculate business result:
Dr Ac 911 30,000
Cr Ac 641 30,000
d. Transfer administrative expenses to calculate business result:
Dr Ac 911 100,000
Cr Ac 642 100,000
e. Transfer finance income to calculate business result:
Dr Ac 515 150,000
Cr Ac 911 150,000
f. Transfer finance expenses to calculate business result:
Dr Ac 911 50,000
Cr Ac 635 50,000
g. Calculate PBT:
PBT = (800,000 – 415,843) – 30,000 – 100,000 + 150,000 – 50,000
= 354,157
h. Calculate CIT expense:
CIT expense = 354,157 * 20% = 70,831.4
Dr Ac 8211 70,831.4
Cr Ac 3334 70,831.4
i. Transfer CIT expense to calculate business result:
Dr Ac 911 70,831.4
Cr Ac 8211 70,831.4
j. Calculate PAT
PAT = 354,157 – 70,831.4 = 283,325.6
Dr Ac 911 283,325.6
Cr Ac 4212 283,325.6
Exercise 3:
1. Produced 20,000 products A, in which sent to warehouse 15,000 products, sent on
consgiment to agent MINA 5,000 products, cost of finish good: 110/unit.
Dr Ac 155 15,000 * 110 = 1,650,000
Dr Ac 157 5,000 * 110 = 550,000
Cr Ac 154 2,200,000
2. Sale on credit: 7,000 product A to company Z
 AVCO of product A = (500,000 + 1,650,000)/(5,000 + 15,000) = 107.5 per unit
+ Dr Ac 632 752,500
Cr Ac 155 107.5 * 7,000 = 752,500
+ Dr Ac 131 (co. Z) 1,155,000
Cr Ac 511 1,050,000
Cr Ac 3331 105,000
3. Agent M transferred cash at bank regarding 4,000 products after deducting commission fee
Commission fee = 2% * 150 * 4,000 = 12,000
VAT of commission fee = 1,200
+ Dr Ac 112 646,800
Dr Ac 641 12,000
Dr Ac 133 1,200
Cr Ac 511 600,000
Cr Ac 3331 60,000
+ Dr Ac 632 440,000
Cr Ac 157 440,000
4. Sale on credit 3,000 products A to Y Co.
+ Dr Ac 632 322,500
Cr Ac 155 107.5 * 3,000 = 322,500
+ Dr Ac 131 (co. Y) 495,000
Cr Ac 511 450,000
Cr Ac 3331 45,000
5. Received 500 products A from company Z due to low quality
+ Dr Ac 155 107.5 * 500 = 53,750
Cr Ac 632 53,750
+ Dr Ac 5212 75,000
Dr Ac 3331 7,500
Cr Ac 131 (co. Z) 82,500
6. Disposed a fixed asset at sale department to company C. Initial cost: 200,000, accumulated
depreciation: 50,000. Price before VAT: 180,000, VAT rate 10%. Company C paid by cash
at bank
+ Dr Ac 214 50,000
Dr Ac 811 150,000
Cr Ac 211 200,000
+ Dr Ac 112 198,000
Cr Ac 711 180,000
Cr Ac 3331 18,000
7. Selling expenses incurred: 50,000
Dr Ac 641 50,000
Cr related ac. 50,000
8. Administrative expenses incurred: 250,000
Dr Ac 642 250,000
Cr related ac. 250,000
9. Financial expenses incurred: 20,000
Dr Ac 635 20,000
Cr related ac. 20,000
 10. Financial income incurred: 50,000
Dr related ac. 50,000
Cr Ac 515 50,000
11. Calculate business result, corporate income tax and profit after tax in quarter II/N:

a. Transfer revenue deduction to define net revenue

Dr Ac 511 75,000
Cr Ac 521 75,000
 Net revenue = 1,050,000 + 600,000 + 450,000 – 75,000 = 2,025,000
b. Transfer net revenue to calculate business result:
Dr Ac 511 2,025,000
Cr Ac 911 2,025,000
c. COGS = 752,500 + 440,000 + 322,500 – 53,750 = 1,461,250
Transfer COGS to calculate business result:
Dr Ac 911 1,461,250
Cr Ac 632 1,461,250
d. Transfer selling expenses to calculate business result:
Dr Ac 911 50,000 + 12,000 = 62,000
Cr Ac 641 62,000
e. Transfer administrative expenses to calculate business result:
Dr Ac 911 250,000
Cr Ac 642 250,000
f. Transfer finance income to calculate business result:
Dr Ac 515 50,000
Cr Ac 911 50,000
g. Transfer finance expenses to calculate business result:
Dr Ac 911 20,000
Cr Ac 635 20,000
h. Transfer other expenses to calculate business result:
Dr Ac 911 150,000
Cr 811 150,000
i. Transfer other income to calculate business result:
Dr Ac 711 180,000
Cr Ac 911 180,000
j. Calculate PBT:
PBT = (2,025,000 – 1,461,250) – 62,000 – 250,000 + (50,000 – 20,000) + (180,000 – 150,000)
= 311,750
k. Calculate CIT expense:
CIT expense = 311,750 * 20% = 62,350
Dr Ac 8211 62,350
Cr Ac 3334 62,350
l. Transfer CIT expense to calculate business result:
Dr Ac 911 62,350
Cr Ac 8211 62,350
m. Calculate PAT
PAT = 311,750 – 62,350 = 249,400
 Dr Ac 911 249,400
Cr Ac 4212 249,400

Exercise 4:
1. Declared and made payment for licence tax: 3,000
+ Declare:
Dr Ac 6425 3,000
Cr Ac 3338 3,000
+ Made payment:
Dr Ac 3338 3,000
Cr Ac 112 3,000
2. Shipping cost incurred in sale department 15,000 excluding 10% VAT. The cost had not
yet paid
Dr Ac 6417 15,000
Dr Ac 133 1,500
Cr Ac 331 16,500
3. Made bank transfer for purchasing some tools used in the company’s office: 65,000
excluding VAT
Dr Ac 6423 65,000
Dr Ac 133 6,500
Cr Ac 112 71,500
4. Purchase some material for fixing the company’s showroom with total value of 45,000.
Payment was made by cash on hand
Dr Ac 6412 45,000
Dr Ac 133 4,500
Cr Ac 111 49,500
5. Received debit notes for electricity, water and telephone bill, in which expenses incurred
in
a. Sale department: 3,500, VAT: 350
b. Administrative department: 2,500, VAT: 250
Dr Ac 6417 3,500
Dr Ac 6427 2,500
Dr Ac 133 600
Cr Ac 112 6,600
6. Public relationship expenses in sale department: 1,500 paid in cash
Dr Ac 6418 1,500
Cr Ac 111 1,500
7. Made payment to buy tools for
a. Sale department: 800
b. Administrative department: 900
c. Manufacturing department: 400
Dr Ac 6413 800
Dr Ac 6423 900
Dr Ac 6273 400
Cr Ac 112 2,100
8. Sent tools (using once) for sale department: 4.500
 Dr Ac 6413 4,500
Cr Ac 153 4,500
9. Customer workshop: 18,000 paid in cash
Dr Ac 6418 18,000
Cr Ac 6418 18,000
10. Rent cleaning services for the whole company in a day: 2,000 paid in cash
Dr Ac 6427 2,000
Cr Ac 111 2,000
11. Agent notified that all goods sent on consignment had been sold already. The company
received total value of these goods after deducting commission fees. Knowing that, total
value of the goods: 880,000 including 10% VAT, commission fee 5% on price before VAT.
Cost of good sold: 600,000
Commission fee = 5% * 880,000/1,1 = 40,000
VAT of commission fee = 4,000
+ Dr Ac 112 836,000
Dr Ac 6417 40,000
Dr Ac 133 4,000
Cr Ac 511 800,000
Cr Ac 3331 80,000
+ Dr Ac 632 600,000
Cr Ac 157 600,000
12. Advertisement expenses 30,000 (before VAT) pay by cash at bank
Dr Ac 6417 30,000
Dr Ac 133 3,000
Cr Ac 111 33,000
13. Salary payables to employees
a. Sale department: 300,000
b. Administrative department: 250,000
Dr Ac 6411 300,000
Dr Ac 6421 250,000
Cr Ac 334 550,000
14. Make payroll related compensation according to current regulations
Dr Ac 6411 300,000 * 23.5% = 70,500
Dr Ac 6421 250,000 * 23.5% = 58,750
Cr Ac 338 129,250
15. Depreciation cost incurred in the month:
a. Sale department: 1,500,000
b. Administrative department: 250,000
Dr Ac 6414 1,500,000
Dr Ac 6424 250,000
Cr Ac 214 1,750,000
 SOLUTION FOR CHAPTER 7
Exercise 1:
- Assumed that all increased fixed assets in 2012 was from 01/01/2012
- Cost of tangible fixed assets at 31/12/2013 = 450 + 156 = 606
- Depreciation of the new asset from the date of acquisition to 31/12/2013
= (156 – 12)/4 * 9/12 = 27
- Depreciation of the exited assets in 2013 = 126 – 118 = 8
- Total depreciation of tangible fixed assets in 2013 = 35
- Accumulated depreciation of tangible fixed assets in 2013 = 126 + 35 = 161
Extracted from Balance sheet of Posco at 31/12/2013
Ending Beginning
Items Codes Notes
balance balance
Non- current Assets
1. Tangible fixed assets 221 445 324
- Cost 222 606 450
- Accumulated depreciation 223 (161) (126)

Exercise 2:
The detailed summary of receivables and payables
31/12/N-1 31/12/N
Debit balance of receivables 40,000 35,000
Credit balance of receivables 20,000 15,000
Debit balance of payables 64,000 70,000
Credit balance of payables 90,000 95,000

Extracted from Balance sheet of Tesco at 31/12/N

 Ending Beginning
Items Codes Notes
balance balance
Trade receivables 131 35,000 40,000
(Debit balance of receivables)
Advances to suppliers 132 70,000 64,000
(Debit balance of payables)

Exercise 3:
1. Journal entries:
- Reflect cost of the omitted asset:
Dr Ac 211 1,025,000,000
Dr Ac 133 100,000,000
Cr Ac 112 1,125,000,000
- Reflect accumulated depreciation of the omitted asset:
Assumed that the asset has useful life of 10 years and is using at the sales
department
Accumulated depreciation of the omitted asset = 1,025,000,000/10 * 7/12 =
59,791,667
Dr Ac 6414 59,791,667
Cr Ac 2141 59,791,667
2. The impact of omitted entries:
+ In the Income Statement of 2016
Items Impact
- Selling expenses Understated 59,791,667
- Net profit Overstated 59,791,667
- PBT Overstated 59,791,667
- CIT tax Overstated 11,958,333
- PAT Overstated 47,833,334
 In the Balance Sheet at 31/12/2016:
Items Impact
ASSETS
Cash and cash equivalent Overstated 1,125,000,000
- Deductible VAT Understated 100,000,000
- Tangible fixed assets
+ Cost Understated 1,025,000,000
+ Accumulated depreciation Understated (59,791,667)
Total assets Understated (59,791,667)
EQUITY
- Taxes and other payables to the State Overstated 11,958,333
- Undistributed profit after tax Overstated 47,833,334
Total Equity Overstated 59,791,667