Question 1
The bank statement of ABC Pte Ltd dated January 31, 20X1 shows a balance of $31,915. The company's cash records on the same date show a balance of $29,842. The following additional information is available:
(i) A cheque issued by the company to its supplier amounting to $583 is still outstanding.
(ii) A non-sufficient funds cheque of $998 from a customer to settle an outstanding debt was returned by the bank with the bank statement.
(iii) The bank charged $30 as service fee.
(iv) Interest income earned on the company's average cash balance at bank was $458.
(v) A cheque deposit of $420 made on January 31 does not appear on bank statement.
(vi) The bank collected a note receivable of $2,300 and an income interest of $180 on behalf of the company.
Required:
(a) Prepare the bank reconciliation statement using the above information.
(b) Prepare the necessary journal entries. Journal narratives are not required.
Question 2
FVE Ltd is a wholesale distribution firm which has provided you with the following information in relation to a particular product, QS11, for the month of March 20X1. The company uses the perpetual inventory system.
Required:
Determine the cost of goods sold and the costs of ending inventory for the month of March using the following inventory costing methods (where necessary, please round your final answer to the nearest cents):
(a) First-in, first out (FIFO) method.
(b) Average cost method.
Question 3
The trial balance of YTP Supplies Pte Ltd (“YTP”) was given as at 31 December 20X6:
Before you prepare the financial statements, you manage to extract out the following additional information.
Additional information:
(i) The 4-year bank loan of $60,000 was entered into on 1 October 20X6. It carries an annual interest of 5% payable on 1 October annually. The first interest payment will be made on 1 October 20X7.
(ii) The $6,000 prepaid insurance was purchased on 1 July 20X6 for a 2-year fire insurance coverage for the building effective 1 July 20X6.
(iii) On 12 December 20X6, the company was informed that one of its customers had severe financial difficulties. The amount owing was $780. The company had not made any allowance for this bad debt.
(iv) On 27 December 20X6, a customer prepaid the company $1,600 in cash for an item to be delivered one week later. The accounts clerk did not record the transaction since the item was not delivered yet.
(v) As at 31 December, salaries amounting to $7,800 remained outstanding. No entry was made for this amount.
(vi) The building was purchased on 1 January 20X5. It was expected to have zero residual value and a useful life of 50 years. The motor vehicles were purchased on 1 January 20X3. They are expected to have zero residual value and a useful life of 10 years.
(vii) YTP adopts a periodic inventory system. A stock count was done and the inventory at year end was $58,300.
Required:
(a) Apply the accrual concept of accounting and prepare all necessary adjusting or additional journal entries as required by the additional information. Journal narratives are not necessary.
(b) Prepare the Statement of Financial Position for YTP as at 31 December 20X6, incorporating all the necessary adjustments.
Question 4
Comparative statements of financial position and extract of income statement for SMI Supplies Pte Ltd (“SMI”) are given as follow:
Additional information:
During the year, an item of PPE which had cost $466,000 and a net book value of $131,000 was sold for $186,000.
Required:
(a) Prepare a statement of cash flows for SMI for the year ended 31 December 20X3 using the indirect method.
(b) The total assets as at 31 December 20X1 was $4,804,000. Compute the following ratios for 20X3 and 20X2. Comment on the changes in the position of the company as revealed by the changes in these ratios:
(i) Debt ratio.
(ii) Gross profit margin.
(iii) Return on Total Assets (ROA).
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