SafeEntry Pte Ltd (the company) is an exclusive distributor of Reliable brand of contactless temperature scanners...
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SafeEntry Pte Ltd ("the company") is an exclusive distributor of Reliable brand of contactless temperature scanners in the South East Asia region. The company complies with SFRS(1) 1-2 - Inventories; and adopts a perpetual inventory system and a first-in-first-out ("FIFO") inventory valuation method to manage its inventories. The company's financial year ends on 30 June. You recently joined the company as an intern from the Nanyang Business School in May 2020. You are tasked to prepare the financial statements for the financial year ended 30 June 2020 and get the accounting records ready for the auditor's review. Below is a list of account balances as at 30 June 2020. All accounts have normal balances unless otherwise stated. Accounts Payable ("AP") Accounts Receivable ("AR") Accumulated Depreciation Borrowings Cash Depreciation Dividends Interest Expense Interest Payable Inventory Motor Vehicles Rent Expense Repair and Maintenance Expense Retained Earnings Salary Expense Sales Discounts Sales Returns and Allowances Sales Revenue Share Capital Utilities Expense $ 64,575 83,475 45,000 150,000 133,211 27,500 10,000 11,250 1,125 873,500 210,000 64,500 2,400 72,500 260,000 7,764 16,500 970,500 400,000 3,600 After reviewing the documents and interviewing key employees, you obtained the following information: (1) You realised that all the inventory purchases were made on credit. You also found that all sales were made on credit term 2/10, n/30. When a sale was made, the sales revenue was recorded but the Cost of Goods Sold ("COGS") was not recorded. You went through the documents and tabulated the following inventory transactions: Date 1 July 2019 7 July 2019 July to December 2019 5 January 2020 3 March 2020 January to June 2020 28 June 2020 Note i ii iv Transaction Note Beginning Inventory Purchases Sales Purchases Purchases Sales Purchases i ii iii iv Quantity 50 Unit Cost Price $ 250 100 120 500 300 1,200 400 1,530 500 260 410 Unit Selling Price $ 300 600 Included in the sales was a return of 10 units from a Malaysian retailer on 7 October 2019 due to over-order. The original sales was made on 25 September 2019 and the customer settled that invoice on 3 October 2019. Both the sale and the collection were recorded correctly. The company sent a credit note for these 10 units but omitted to record the return. This Malaysian retailer has an outstanding debt of $8,800 as at 30 June 2020. Included a purchase return of 5 units on 15 January 2020. The supplier sent a credit note but the company has omitted to record the return. Included in the sales were 50 units sold to a Vietnamese retailer based on FOB Destination point. The 50 units were shipped out on 23 June 2020 and arrived in Vietnam on 30 June 2020. The inventory purchase was made based on FOB Shipping point. The supplier shipped out the goods on 25 June 2020 and the goods arrived on 3 July 2020. (4) (2) The company did a physical count of its store on 30 June 2020 and 150 units were counted. (3) The company obtained a loan of $300,000 from a bank on 1 December 2017. The loan principal would be repaid in four equal annual instalments starting from 1 December 2018. Interest rate is 6% per annum with interest payable semi-annually in arrears on every 1 December and 1 June. Interest rate was increased to 7.2% from 1 June 2020. Other than this borrowing, the company has no other borrowings. The company renewed its tenancy agreement for another year on 1 January 2020. The company usually pays its quarterly rental of $12,000 in advance on every 1 January, 1 April, 1 July and 1 October. Its quarterly rental was increased to $13,500 with effect from the rent payment made on 1 January 2020. The company made a payment of $13,500 wrongly on 1 June 2020 instead of 1 July 2020. All payments were recorded. There no other rental paid during the financial year ended 30 June 2020. (5) Annual depreciation for the financial year ended 30 June 2020 was $30,000. (6) On 20 February 2020, the company correctly recorded the issuance of shares capital of $100,000. Required V The company consigned 50 units to a Thai consignee on 1 June 2020 at a special selling price of $500 per unit. No record was made for this transaction. You called the Thai consignee and found that 35 units were sold by the financial year ended on 30 June 2020. There was no other goods on consignment. (a) Without taking into consideration the physical inventory count mentioned in note (2) above, calculate the ending inventory as at 30 June 2020 and COGS for the financial year ended 30 June 2020. Show your answers in terms of units and dollar value. (c) (b) Prepare the adjusting / correcting journal entries for items (1) to (6), without dates and narrations, for the financial year ended 30 June 2020. If no adjusting / correcting journal entry is required for a particular item, state "no entry" and explain the reason. Round your figures to the nearest dollar. Show adequate workings as marks are awarded for workings. (d) Assume that there is no income tax. Prepare the income statement for the financial year ended 30 June 2020. Prepare the statement of changes in equity for the financial year ended 30 June 2020. (e) Prepare a classified balance sheet as at 30 June 2020. (f) The company has recorded the interest and rent payments as interest expense and rent expense respectively during the financial year ended 30 June 2020. Discuss, based on the SFRS(I) conceptual framework and the relevant accounting principles, whether this is the appropriate accounting treatment. SafeEntry Pte Ltd ("the company") is an exclusive distributor of Reliable brand of contactless temperature scanners in the South East Asia region. The company complies with SFRS(1) 1-2 - Inventories; and adopts a perpetual inventory system and a first-in-first-out ("FIFO") inventory valuation method to manage its inventories. The company's financial year ends on 30 June. You recently joined the company as an intern from the Nanyang Business School in May 2020. You are tasked to prepare the financial statements for the financial year ended 30 June 2020 and get the accounting records ready for the auditor's review. Below is a list of account balances as at 30 June 2020. All accounts have normal balances unless otherwise stated. Accounts Payable ("AP") Accounts Receivable ("AR") Accumulated Depreciation Borrowings Cash Depreciation Dividends Interest Expense Interest Payable Inventory Motor Vehicles Rent Expense Repair and Maintenance Expense Retained Earnings Salary Expense Sales Discounts Sales Returns and Allowances Sales Revenue Share Capital Utilities Expense $ 64,575 83,475 45,000 150,000 133,211 27,500 10,000 11,250 1,125 873,500 210,000 64,500 2,400 72,500 260,000 7,764 16,500 970,500 400,000 3,600 After reviewing the documents and interviewing key employees, you obtained the following information: (1) You realised that all the inventory purchases were made on credit. You also found that all sales were made on credit term 2/10, n/30. When a sale was made, the sales revenue was recorded but the Cost of Goods Sold ("COGS") was not recorded. You went through the documents and tabulated the following inventory transactions: Date 1 July 2019 7 July 2019 July to December 2019 5 January 2020 3 March 2020 January to June 2020 28 June 2020 Note i ii iv Transaction Note Beginning Inventory Purchases Sales Purchases Purchases Sales Purchases i ii iii iv Quantity 50 Unit Cost Price $ 250 100 120 500 300 1,200 400 1,530 500 260 410 Unit Selling Price $ 300 600 Included in the sales was a return of 10 units from a Malaysian retailer on 7 October 2019 due to over-order. The original sales was made on 25 September 2019 and the customer settled that invoice on 3 October 2019. Both the sale and the collection were recorded correctly. The company sent a credit note for these 10 units but omitted to record the return. This Malaysian retailer has an outstanding debt of $8,800 as at 30 June 2020. Included a purchase return of 5 units on 15 January 2020. The supplier sent a credit note but the company has omitted to record the return. Included in the sales were 50 units sold to a Vietnamese retailer based on FOB Destination point. The 50 units were shipped out on 23 June 2020 and arrived in Vietnam on 30 June 2020. The inventory purchase was made based on FOB Shipping point. The supplier shipped out the goods on 25 June 2020 and the goods arrived on 3 July 2020. (4) (2) The company did a physical count of its store on 30 June 2020 and 150 units were counted. (3) The company obtained a loan of $300,000 from a bank on 1 December 2017. The loan principal would be repaid in four equal annual instalments starting from 1 December 2018. Interest rate is 6% per annum with interest payable semi-annually in arrears on every 1 December and 1 June. Interest rate was increased to 7.2% from 1 June 2020. Other than this borrowing, the company has no other borrowings. The company renewed its tenancy agreement for another year on 1 January 2020. The company usually pays its quarterly rental of $12,000 in advance on every 1 January, 1 April, 1 July and 1 October. Its quarterly rental was increased to $13,500 with effect from the rent payment made on 1 January 2020. The company made a payment of $13,500 wrongly on 1 June 2020 instead of 1 July 2020. All payments were recorded. There no other rental paid during the financial year ended 30 June 2020. (5) Annual depreciation for the financial year ended 30 June 2020 was $30,000. (6) On 20 February 2020, the company correctly recorded the issuance of shares capital of $100,000. Required V The company consigned 50 units to a Thai consignee on 1 June 2020 at a special selling price of $500 per unit. No record was made for this transaction. You called the Thai consignee and found that 35 units were sold by the financial year ended on 30 June 2020. There was no other goods on consignment. (a) Without taking into consideration the physical inventory count mentioned in note (2) above, calculate the ending inventory as at 30 June 2020 and COGS for the financial year ended 30 June 2020. Show your answers in terms of units and dollar value. (c) (b) Prepare the adjusting / correcting journal entries for items (1) to (6), without dates and narrations, for the financial year ended 30 June 2020. If no adjusting / correcting journal entry is required for a particular item, state "no entry" and explain the reason. Round your figures to the nearest dollar. Show adequate workings as marks are awarded for workings. (d) Assume that there is no income tax. Prepare the income statement for the financial year ended 30 June 2020. Prepare the statement of changes in equity for the financial year ended 30 June 2020. (e) Prepare a classified balance sheet as at 30 June 2020. (f) The company has recorded the interest and rent payments as interest expense and rent expense respectively during the financial year ended 30 June 2020. Discuss, based on the SFRS(I) conceptual framework and the relevant accounting principles, whether this is the appropriate accounting treatment.
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The question is asking for several financial statement components and a discussion of accounting treatment for interest and rent payments Lets begin by calculating the ending inventory and Cost of Goo... View the full answer
Related Book For
Mathematical Statistics With Applications In R
ISBN: 9780124171138
2nd Edition
Authors: Chris P. Tsokos, K.M. Ramachandran
Posted Date:
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