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Western University
Business Administration
Business Administration 2257
Stanley Dunn

Keep track of all the shares and the foot notes, split inventory accordingly Sales and Collections  Adjust for cash and credit sales from total sales  Record total units sold (will be used in E/B calculation for final goods) Manufacturing Process  Record the proxy used to calculate pFOH. (Ex: Direct labour, Direct labour hour, Machine hour) Fixed Assets  Adjust for proper allocation of Land/Building purchased  Record how much % of the building is used for production (WIP %)  Some assets might be purchased by common stock (PAY ATTENTION TO DATE OF PURCHASE)  Depreciate all fixed assets: o All non-production equipment goes to depreciation expense o All production equipment goes to WIP o All patent goes to WIP o A portion of building goes into depreciation o If nothing is mentioned about the depreciation, assume it is the same amount from last Lease o Operating: treat it as a normal expense o Finance: o Purchase: PV all future payments (n-1, i) o First day: pay the first payment o FYE: Depreciate & Accrue interest = BV*i (interest expense + interest payable) o Next Year’s payment: payment is the same. Write down BV amount equal to payment (sum of interest expense + interest payable) Operating Costs o Adjust for this year’s expense and bills unpaid o Wage’s payable o Adjust for utilities and any expenses not mentioned (assume same % allocation from last year) o Insurance adjustments (some to prepaid some to WIP – USE WIP %) o Rental adjustments (use WIP%) o Wages payable has a debit entry to DL o Production Supervisor is in FOH o Main person usually has a portion going into DL and FOH (MAKE SURE TO DIFFERENTIATE) o Check to see if I missed any expenses that should have went in WIP Inventory o Determine if it’s FOB shipping points or destination o Shipping points usually have an item in transit, so don’t include in E/B on hand, just E/B o Determine all the raw materials used. (Check to see if they are properly allocated) o Adjust for production supplies o Transportation-In split to each order (account for this cost in E/B) o E/B in finished goods is based on costs, not on revenue earned. (COST=/=Revenue) o E/B in any of the inventories could use (FIFO, weighted average or specific identification) o Check WIP three times if time permits. Do the “iffy” section twice if time permits. Keep Calm and Carry On Keep track of all the shares and the foot notes, split inventory accordingly
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