CHAPTER: 5 a) In Reid Supply company during September 2020, the following transactions and events occurred....

     

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CHAPTER: 5 a) In Reid Supply company during September 2020, the following transactions and events occurred. Sept. 4 Purchased 70 backpacks at $20 each from Hunter, terms 2/10, n/30. Sept. 6 Received credit of $100 for the return of 5 backpacks purchased on Sept. 4 that were defective. Sept. 9 Sold 40 backpacks for $35 each to Oliver Books, terms 2/10, n/30. Sept. 13 Sold 15 backpacks for $35 each to Heller Office Supply, terms n/30. Sept. 14 Paid Hunter in full, less discount. Instructions Journalize the September transactions for Reid Supply using perpetual inventory system. Prepare necessary T accounts, trail balance and an income statement for the month ended September 2020. [5 marks] b) What are the differences between perpetual inventory system and periodic inventory system of recording merchandise operations? [2] c) What is FOB shipping point and FOB destination? Explain with examples. [2] d) What is the main difference between preparation of income statement under perpetual inventory system and periodic inventory system? [1] CHAPTER: 6 a) At 1 May 2019 Troy company had 700 engines in inventory, valued at Tk. 190/- each. During the year ended 30 April 2020 the following transactions took place: 2019 1 July Purchased 500 engines at TK 220/- each 1 November Sold 400 engines for TK 160,000/- 2020 1 February Purchased 300 engines at TK 230/- each 15 April Sold 250 engines for 125,000/- Required: 1) Suppose the company uses FIFO method. You are required to calculate the company's losing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross profit. [3] 2) Suppose the company uses LIFO method. You are required to calculate the company's closing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross profit. [3] 3) Suppose the company uses Weighted average method. You are required to calculate the company's closing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross profit. [3] b) What are the assumptions behind FIFO, LIFO and weighted average methods? In case of inflation, which method is the most suitable for determining ending inventory and cost of goods sold? In case of deflation, will your choice differ? Why? [1] CHAPTER: 8 Open with Google Docs a) Silenac Inc. is maintaining a Bank account in Orlando Bank Ltd. At the end of the month December, 2017, the cash book of Silenac Inc. shows a Bank balance of Tk. 12,600. On the other hand, the bank statement covering the month of December shows an ending balance of Tk. 13,995. The following additional information was obtained by Silenac Inc: (1) A cheque paid to a vendor for Tk. 650 had been entered in the cash book as Tk. 860. (2) Cash deposited to the Bank for Tk. 960 had been entered in the cash book as Tk. 690. (3) A Transfer of Tk. 720 from the account to another Bank account in Loyds Bank was not recorded in cash book. (4) Dividend received by Orlando Bank on behalf of Silenac Inc. for Tk. 120 was not informed to Silenac Inc. and yet to be recorded in the cash book. (5) Cheque written in December but not charged to the December Bank statement for Tk. 870. (6) Bank charges of Tk. 350 was not recorded in Cash Book. (7) A standing order payment for Tk. 110 had not been entered in Cash Book. (8) A cheque received from an old customer for Tk. 650 was deposited in the Bank for collection; however, it was returned by the bank marking 'Not Sufficient Fund'. (9) Overdue interest charge of Tk. 70 was not yet recorded in cash book. (10) A customer directly deposited Tk. 2,000 in the Bank account which was not yet recorded in cash book. (11) The bank incorrectly charged a check of N Oil Co. for the amount of Tk. 175 to Silenac Inc. account. Required: 1) Prepare the Bank Reconciliation Statement for the month ended December 31, 2017 [6] 2) Prepare necessary adjusting entries on the books of Silenac Inc. [2] b) Briefly explain the necessity and purpose of preparing a Bank Reconciliation Statement. [2] Page 2 CHAPTER 9 Q + a) Avett Furniture Store has credit sales of $400,000 in 2014 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2014, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that $7,000 will prove to be uncollectible. On March 4, 2015, the credit manager authorizes a write-off of the $1,200 balance owed by B. Fernitti. Instructions 1) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2014. [1] 2) Show the balance sheet presentation of accounts receivable on December 31, 2014. [1] 3) On March 4, before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000. Make the appropriate entry to record the write-off of the Ferntti account. Also show the balance sheet presentation of accounts receivable before and after the write-off. [3] b) What are the differences between direct write off method and allowance method of recording bad debt expense? Which method is more suitable with matching principle? Why? Give a suitable example with necessary journal entries under both methods? [5] CHAPTER: 10 (a) On January 1, 2006, a company purchased a machinery at an acquisition cost of Tk. 84,000. The machinery has been depreciated by the straight line method using a 4 year service life and a Tk. 12,000 salvage value. The company's fiscal year ends on December 31. Requirements: Prepare the journal entries to record the disposal of the machinery that it was: (i) Retired and scrapped with no salvage value on January 1, 2010. [1] (ii) Sold for Tk. 15,000 on July 1, 2009. [1] (b) A plant asset acquired at the beginning of the fiscal year at a cost of Tk. 28,20,000 has an estimated trade – in value/ salvage value of Tk. 3,00,000 and an estimated useful life of 8 years. Determine the following: (i) The amount of annual depreciation by the straight-line method. [1] (ii) The amount of depreciation for the second year computed by the double declining balance method. [1] c) What do you mean by plant asset? How do you record the acquisition of plant asset, deprecation the plant asset and disposal of plant asset? [2] d) Suppose the management's performance is aligned with the company's performance. As a manager of the company, you wish to have a short-term profit planning for the company, which depreciation method can you target for the initial years to achieve your goal? Why? Illustrate with examples. [2] e) What is your overall learning from this course? What is your understanding of accounting before and after the semester? What do you think about the career of accounting? Will you choose accounting as a career? Why or why not? [2] CHAPTER: 5 a) In Reid Supply company during September 2020, the following transactions and events occurred. Sept. 4 Purchased 70 backpacks at $20 each from Hunter, terms 2/10, n/30. Sept. 6 Received credit of $100 for the return of 5 backpacks purchased on Sept. 4 that were defective. Sept. 9 Sold 40 backpacks for $35 each to Oliver Books, terms 2/10, n/30. Sept. 13 Sold 15 backpacks for $35 each to Heller Office Supply, terms n/30. Sept. 14 Paid Hunter in full, less discount. Instructions Journalize the September transactions for Reid Supply using perpetual inventory system. Prepare necessary T accounts, trail balance and an income statement for the month ended September 2020. [5 marks] b) What are the differences between perpetual inventory system and periodic inventory system of recording merchandise operations? [2] c) What is FOB shipping point and FOB destination? Explain with examples. [2] d) What is the main difference between preparation of income statement under perpetual inventory system and periodic inventory system? [1] CHAPTER: 6 a) At 1 May 2019 Troy company had 700 engines in inventory, valued at Tk. 190/- each. During the year ended 30 April 2020 the following transactions took place: 2019 1 July Purchased 500 engines at TK 220/- each 1 November Sold 400 engines for TK 160,000/- 2020 1 February Purchased 300 engines at TK 230/- each 15 April Sold 250 engines for 125,000/- Required: 1) Suppose the company uses FIFO method. You are required to calculate the company's losing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross profit. [3] 2) Suppose the company uses LIFO method. You are required to calculate the company's closing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross profit. [3] 3) Suppose the company uses Weighted average method. You are required to calculate the company's closing inventory of engines on 30 April 2020. Calculate cost of goods sold and gross profit. [3] b) What are the assumptions behind FIFO, LIFO and weighted average methods? In case of inflation, which method is the most suitable for determining ending inventory and cost of goods sold? In case of deflation, will your choice differ? Why? [1] CHAPTER: 8 Open with Google Docs a) Silenac Inc. is maintaining a Bank account in Orlando Bank Ltd. At the end of the month December, 2017, the cash book of Silenac Inc. shows a Bank balance of Tk. 12,600. On the other hand, the bank statement covering the month of December shows an ending balance of Tk. 13,995. The following additional information was obtained by Silenac Inc: (1) A cheque paid to a vendor for Tk. 650 had been entered in the cash book as Tk. 860. (2) Cash deposited to the Bank for Tk. 960 had been entered in the cash book as Tk. 690. (3) A Transfer of Tk. 720 from the account to another Bank account in Loyds Bank was not recorded in cash book. (4) Dividend received by Orlando Bank on behalf of Silenac Inc. for Tk. 120 was not informed to Silenac Inc. and yet to be recorded in the cash book. (5) Cheque written in December but not charged to the December Bank statement for Tk. 870. (6) Bank charges of Tk. 350 was not recorded in Cash Book. (7) A standing order payment for Tk. 110 had not been entered in Cash Book. (8) A cheque received from an old customer for Tk. 650 was deposited in the Bank for collection; however, it was returned by the bank marking 'Not Sufficient Fund'. (9) Overdue interest charge of Tk. 70 was not yet recorded in cash book. (10) A customer directly deposited Tk. 2,000 in the Bank account which was not yet recorded in cash book. (11) The bank incorrectly charged a check of N Oil Co. for the amount of Tk. 175 to Silenac Inc. account. Required: 1) Prepare the Bank Reconciliation Statement for the month ended December 31, 2017 [6] 2) Prepare necessary adjusting entries on the books of Silenac Inc. [2] b) Briefly explain the necessity and purpose of preparing a Bank Reconciliation Statement. [2] Page 2 CHAPTER 9 Q + a) Avett Furniture Store has credit sales of $400,000 in 2014 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2014, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule of accounts receivable and estimates that $7,000 will prove to be uncollectible. On March 4, 2015, the credit manager authorizes a write-off of the $1,200 balance owed by B. Fernitti. Instructions 1) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2014. [1] 2) Show the balance sheet presentation of accounts receivable on December 31, 2014. [1] 3) On March 4, before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000. Make the appropriate entry to record the write-off of the Ferntti account. Also show the balance sheet presentation of accounts receivable before and after the write-off. [3] b) What are the differences between direct write off method and allowance method of recording bad debt expense? Which method is more suitable with matching principle? Why? Give a suitable example with necessary journal entries under both methods? [5] CHAPTER: 10 (a) On January 1, 2006, a company purchased a machinery at an acquisition cost of Tk. 84,000. The machinery has been depreciated by the straight line method using a 4 year service life and a Tk. 12,000 salvage value. The company's fiscal year ends on December 31. Requirements: Prepare the journal entries to record the disposal of the machinery that it was: (i) Retired and scrapped with no salvage value on January 1, 2010. [1] (ii) Sold for Tk. 15,000 on July 1, 2009. [1] (b) A plant asset acquired at the beginning of the fiscal year at a cost of Tk. 28,20,000 has an estimated trade – in value/ salvage value of Tk. 3,00,000 and an estimated useful life of 8 years. Determine the following: (i) The amount of annual depreciation by the straight-line method. [1] (ii) The amount of depreciation for the second year computed by the double declining balance method. [1] c) What do you mean by plant asset? How do you record the acquisition of plant asset, deprecation the plant asset and disposal of plant asset? [2] d) Suppose the management's performance is aligned with the company's performance. As a manager of the company, you wish to have a short-term profit planning for the company, which depreciation method can you target for the initial years to achieve your goal? Why? Illustrate with examples. [2] e) What is your overall learning from this course? What is your understanding of accounting before and after the semester? What do you think about the career of accounting? Will you choose accounting as a career? Why or why not? [2]

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