MUSINGS

The following information pertains to Moose Corporation: 2010 2009 Net sales $350,000 $342,000 Net accounts receivable 189,000 197,000 Allowance for bad debts 5,500 7,000 Total assets 430,000 425,000 What are the different ratios that can be deduced and interpreted from the above? Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Company Kyan Company Data from the current year-end balance sheets Data from the current year's income statement Assets Sales $ 770,000 $ 883,200 Cash $ 19,000 $ 34,000 Cost of goods sold 588,100 648,500 Accounts receivable, net 34,400 51,400 Interest expense 9,300 12,000 Current notes receivable (trade) 10,000 7,400 Income tax expense 14,800 24,383 Merchandise inventory 84,540 136,500 Net income 157,800 198,317 Prepaid inventory 5,400 7,400 Basic earnings per share 4.15 4.59 Plant assets, net 320,000 312,400 Cash dividends per share 3....

Property, plant and equipment include the assets that are expected to be used in operations for more than a year. Assets classified as property, plant and equipment are tangible assets that have physical substance. Property, plant and equipment include tangible assets that have physical substance, such as land, buildings, machinery, equipment, vehicles, furniture and fixtures. Because these assets are expected to be used over multiple accounting periods, they are called as long-lived assets. Property, plant and equipment are recorded at the acquisition cost when they are initially recorded. In subsequent periods, accumulated depreciation is subtracted from the acquisition cost to report the carrying amount of the asset, except for land. Land is not depreciated and the acquisition cost of land is reported as carrying amount in the financial statements. All property, plant and equipment other than land are depreciated over the useful life of the asset. Depreciation is...

(a) Completed Contracts: When a contract is completed, the overall profit or loss on the contract is transferred to the profit & Loss Account fully. (b) Incomplete Contracts: When there is loss on an incomplete contract, it is fully transferred to the profit and loss account. When the contract account of an incomplete contract shows profit, it should not be treated as profit earned but only as ‘Notional profit. Uncertainty exists relating to material prices and wage rates. Natural calamities like rains and floods can cause loss on contracts. So, a conservative policy of making provision for contingencies and taking to the credit of P & L A/c the balance of notional profit is usually practised. The following are the rules or principles to be followed in relation to profit on incomplete contracts: (a) When work-certified is less than 25% of contract price- No profit should be transferred to P & L A/c. The entire notional profit is kept in reserve for continge...

Meaning of Work Certified  When contractor takes the contract to complete any construction work, it may complete in 4 or 5 years. but contractor has to pay different expenses for material, labor and others. So, it is very necessary to pay him some money of contract. This money is given on the basis of work done. So, any part of construction which is completed by contractor will be work certified if it is certified by an authority. Authority may be independent engineer or architect who can estimated the work. He will issue the certificate of work done after certifying the work of construction. On this work certified, contractor has right to get money of contract. Meaning of Work Uncertified Work uncertified means work done but not certified by authority. So, contractee will cut some money on the basis of work uncertified and will keep in his pocket. This will be retention money. Accounting Treatment of Work Certified and Work Uncertified  (I) Work  certified...

The Contract Ledger of a company showed the following particulars in respect of Contract No. 50 which was commenced on 1st April 2019: The contract was completed by 31st March 2020 and the contract price was $2,00,000. The value of materials and plant returned to store on 31st March 2020 was $6,000 and $12,000 respectively. The contract price was received in full on 31st March. Prepare  Contract Account  and Contractee’s Personal Account. The following is the summarised record as on 31st March 2019, relating to Contract No. 414 completed during the year. Required: Prepare the Contract Account from the above particulars

What is a Contract Costing? Contract Costing is otherwise called as terminal costing. It is one of the methods of Job Costing. Contract costing is also prospered just like job costing. A separate number is allotted to each contract and records are also maintained for each contract separately. The cost unit is each contract account. Where is contract costing method used? The contract costing method is used mostly by builders, civil contractors, ship builders, and construction and mechanical engineering firms. Generally, the contract is undertaken at the site of contract i.e. customer and according to the specifications of customer. More over, the period inquired to complete a contract is fairly long time or usually more than one year. The main purpose of preparing contract account is the ascertainment of cost of each contract separately and profit on each contract. Features of Contract Costing The following are the features of contract costing. 1. A co...