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FIFO, LIFO and Average Closing Stock Costing by Perpetual and Periodic Example

May 29, 2013 Leave a comment

Problem

Accounts of ABC Ltd as on 31st Dec, 1997

Dec, 1997

1

Opening Stock 300 Units @ Rs. 9.70

3

Purchases 250 Units @ Rs. 9.80

11

Issues 400 Units

15

Purchases 300 Units @ Rs. 10.05

20

Issues 210 Units

25

Purchases 150 Units @ Rs. 10.30

26

Issues 100 Units

Work out the value of closing stock under the following methods of pricing

  1. FIFO (Perpetual)
  2. LIFO (Perpetual)
  3. Weighted Average (Perpetual)
  4. FIFO (Periodic)
  5. LIFO ((Periodic)
  6. Weighted Average (Periodic)

Solution

FIFO (Perpetual)

Date

Purchase

Issues

Balance

Dec, 1997

Qty

Rate

Value

Qty

Rate

Value

Qty

Rate

Value

1

300

9.7

2910

3

250

9.8

2450

300

9.7

2910

250

9.8

2450

11

300

9.7

2910

150

9.8

1470

100

9.8

980

0

15

300

10.05

3015

150

9.8

1470

0

300

10.05

3015

20

0

150

9.8

1470

240

10.05

2412

0

60

10.05

603

0

25

150

10.3

1545

240

10.05

2412

0

150

10.3

1545

26

0

100

10.05

1005

140

10.05

1407

0

150

10.3

1545

Value of Closing Stock

290

2952

LIFO (Perpetual) Read more…

Taxation Accounting Handling in Pakistan as Withholding Tax Agent

May 30, 2012 Leave a comment

Dear readers, I have decide to write tutorial for you about how taxation are done in Pakistan. The tutorial consists of four portions, First tax chart & tax ratios in Pakistan, scenarios in this tutorial will be cover, pricing from a supplier’s products including sale tax and finally the accounts handling of purchase & taxation as withholding tax Agent.

Let start

Tax Chart & Tax Ratios in Pakistan:

Below I have selected few heads for tax charts, with mentioning its nature and tax ratio.

Tax Chart Nature Tax (in percent)
Sale tax Payment of Goods 16.00%
Income Tax Payment of Goods 3.50%
Income Tax Services 6.00%
Income Tax Brokerage and Commission (Advertising Agent) 5.00%
Income Tax Print Media and News Papers Exemption

Scenarios:

Lets assume Company ABC purchases goods from Supplier S. Supplier S may be registered or unregistered. Below are two scenarios

Scenario Description
a If Supplier S is registered then Sale Tax 16% is narrated, in such a way that 20% will paid by Withholding Agent (Company ABC) and rest of 80% will be paid by registered Supplier S to Govt Treasury.
b If Supplier S is unregistered then Sale Tax 16% is narrated, in such a way that 100% will paid by Withholding Agent to Govt Treasury.

Pricing from a Supplier’s Products Including Sale Tax and Income Tax:

Situation a

Situation b

Registered Supplier S Pricing Unregistered Supplier S Pricing
Product P Gross Price including With Profit margin 191.88 Product P Gross Price including With Profit margin 191.88
Income Tax @ 3.5 8.12 Income Tax @ 3.5 8.12
Product P Selling Price including income tax 200 Product P Selling Price including income tax 200
Sale Tax @ 16% 32 Sale Tax @ 16% 32
Product P Selling Price including Sale tax 232 Product P Selling Price including income tax 232
Supplier S Sale Tax Amount to submitRules for Sale Tax:Supplier S have to submit this 32 Rupees (Sale Tax @ 16%). But According to Rule for Registered Supplier, Supplier S only submit 80% of 32 to Govt Treasury and Rest of 20% of 32 will be submitted by Company ABC (Withholding Agent) to Govt Treasury on behave of Supplier S. 25.6 Supplier S Sale Tax Amount to submitRules for Sale Tax:Supplier S have to submit this 32 Rupees (Sale Tax @ 16%). But According to Rule for Unregistered Supplier, 100% of 32 will be submitted by Company ABC (Withholding Agent) to Govt Treasury on behave of Supplier S. 0

Accounts Handling of Purchase & Taxation as Withholding Tax Agent:

Suppose company ABC is the registered withholding tax agent. Company ABC purchasing a product P from Supplier S. Here in this example we will discuss how company ABC maintains its accounting transaction when Supplier S is registered and unregistered.

Lets start

Supplier S is Registered

Supplier S is Unregistered

Description

Dr

Cr

Description

Dr

Cr

Purchase Entry Purchase Entry
Product P
(Purchase or Expense )

232

Product P
(Purchase or Expense )

232

Account Payable

217.48

Account Payable

191.88

Sale tax Payable
20% of GST (GST @ 16%)

6.4

Sale tax Payable @16%

32

Income Tax Payable @ 3.5

8.12

Income Tax Payable @ 3.5

8.12

Payment Entry Payment Entry
Account Payable

217.48

Account Payable

191.88

Bank/Cash

217.48

Bank/Cash

191.88

Withholding Tax Return Withholding Tax Return
Sale Tax Payable
With Holding Sales Tax deducted From Supplier S

6.4

Sale Tax Payable
With Holding Sales Tax deducted From Supplier S

32

Income Tax Payable
With Holding Income Tax deducted From Supplier

8.12

Income Tax Payable
With Holding Income Tax deducted From Supplier

8.12

Bank/Cash

14.52

Bank/Cash

40.12

In coming new post I will show how this small example will be implemented in OpenERP.

Inno8Tech (Outsource Project) Success Story in OpenERP v6

March 2, 2012 3 comments
Project :
Outsource Project (Inno8Tech)
 
Project Assigned By:
Inno8Tech
 
Project Completed  By:
Mohsin Yaseen and Waqas Pitafi
  
Software Tools Used:
OpenERP v6
 
Overview of Modules Developed and Customized in OpenERP:
 
Customized Modules are; 
-Finance, Sale and Purchase
-CRM
-HR, Expense, Contract, Payroll, Attendance, Time Sheet and Recruitment 
-Project Management
 
Developed Modules are; 
-Project based Employee Advances & Recovery, Integration with invoice (finance), approval workflow
-Email and sms alerts against project completion, task assignment, task completion, project based advance requisition, advance approval and advance rejection. 
 
 

OpenERP Training in Pakistan from NUST, Islamabad (Non OpenERP Partner)

February 9, 2012 8 comments

Dear Viewers,

NUST offering OpenERP training. NUST is one of the ‘TOP 100 UNIVERSITIES IN ASIA’ and one of the best educational industry in Pakistan. NUST have 16-18 schools of different areas in Pakistan including capital cities.

This workshop has been designed for both IT Professionals and people from Management background who would like to explore how HRM can be effectively managed through an open source ERP solution. The workshop is also beneficial for IT and Management students to know about state of the art in ERP solutions deployment and its related challenges.

Please Follow the details from given advertisement.

Registration: http://www.seecs.nust.edu.pk/openerp

Contact With:

SCHOOL OF ELECTRICAL ENGINEERING AND COMPUTER SCIENCE

A center of excellence for quality education and research

Sector H-12 Islamabad Tel: 051 9085 2400 Fax: 051 8317363 info@seecs.nust.edu.pk  www.seecs.nust.edu.pk  www.nust.edu.pk

Dividend, Book Value, Market Value, Subscribed Shares Calculation

February 6, 2011 11 comments

Balance Sheet of a company:

Balance Sheet of a Business

Assets

Liabilities & Stockholders Equity

Current Assets(Includes Subscribed Receivable 7200000) 31629714 Current liabilities 15387428
Fixed Assets 53856000 long-term liabilities 10258286
Stockholders’ equity 59840000
Total Assets 85485714 Total 85485714

Statement of Shareholders equity:

Shareholders Equity
Preferred Stock
Par Value Rs. 100
Callable at Rs, 102
Authorized Shares 200000
Dividend per Share Rs. 6
12000000
Total Preferred Stock at par 12000000
Common Stock
Par Value Rs. 5
Authorized Shares 5000000
Issued 10000000
Subscribed 4000000
Total Common Stock at Par 14000000
Additional Paid in Capital:
Preferred Stock at premium 360, 000
Common (including subscribed) at premium 30800000
Total Additional Paid in Capital 31160000
Retained Earning 2680000
Total Stockholders Equity 59840000

Read more…

Dividend, Retained Earning and Share (Stock) Holders Equity Calculation

February 4, 2011 Leave a comment

Information:

Exxen limited was incorporated in January 2004 with authorization to issue 75,000 shares of Rs. 100 par value preferred stock and 1.5 million shares of Re. 1 par value of common stock. The company issued the 50,000 preferred shares at par. 700,000 shares of common stock were issued at Rs. 15 per share. The preferred stock was issued to pay a 9% cumulative dividend and is callable at Rs. 110. From the first year of incorporation to 2008 the company earned a total profit of Rs. 8,750,000 and paid dividend of Rs. 0.60 per share each year on the common stock. In 2009, the company reported a net Profit of Rs. 1,500,000 and paid no dividends to common stock holders.

Requirements:

Prepare the stockholder’s equity section of the balance sheet from the information given above at December 31, 2009.

Read more…

Provident Fund Calculation and Payroll in Manual System & in OpenERP

December 31, 2010 26 comments

Provident Fund Register of an Employee (say Mohsin) of 6 Months is below;

Mohsin Provident Fund Register
Provident Fund
Month Basic Salary By Employee 12% By Company 1.3% Net Salary Payable Net Provident Fund Payable
July 15000 1800 195 13200 1995
Aug 15000 1800 195 13200 1995
Sep 15000 1800 195 13200 1995
Oct 15000 1800 195 13200 1995
Nov 15000 1800 195 13200 1995
Dec 15000 1800 195 13200 1995
Total 90000 10800 1170 79200 11970

Accounting Aspects of each month as Below:

We will use the following list of accounts with balances. Read more…