EMICYEAR2019-2020
Question No 3:
Five Star enterprises is a multinational company situated in Muscat and is operating in more than
26 different countries. Majority of multinational companies are facing a problem that accounting
rules are different around the world. Same is the case with Five Star enterprises. While preparing
their statements, they often have to prepare them twice, once in their home country in accordance
with the home country rules and once abroad in accordance with the foreign rules. Additionally,
every region has different historical backgrounds, norms and political systems. They also have
different patterns of financial accounting practices.
Due to all these factors and practices, businesses are under high risk by treating same problems
differently all over. Likewise others, Five Star enterprises also faces difficulties while preparing
their financial results. The management finds it risky, when same company operating in different
countries follows different pattern of reporting. To consider these different accounting rules, now
throughout the world, there is strong need of international harmonisation, and nearly all the
countries in the world now support to develop a set of international accounting standards.
It focuses on narrowing the areas of difference and to eradicate undesirable alternative practices
in financial reporting. It is process of merging and combining various practices into an organized
structure, which produces collaborative result. It is believed some companies have a public
accountability to a great variety of interest groups. These differences which are in the mind of
accountants lead to different views on what is suitable accounting treatment.
a. You are the country manager of Five Star enterprises Oman. Your head office in Italy, is
receiving collective feedback from all the branches. Being the representative of Five Star
enterprises, what would be your feedback in support of harmonisation?
b. In your opinion, what were the challenges faced by Five Star enterprises while preparing their
annual report and explain how it can be avoided in future?
Your answer should be around 400 words for each question.

The Pat Company has estimated its activity for May 2020. Selected data from these estimated amounts are as follows:

Sales $350,000

Gross Profit (based on sales) 30%

Increase in trade A/R during May $10,000

Change in A/P during May $0

Increase in inventory during May $5,000

Variable selling and administrative expenses includes a charge for uncollectible accounts of 1% of sales. Depreciation expense of $20,000 per month is included in fixed selling and administrative expenses.

What are the estimated cash payments from operations for May?

Update the balance sheet above to reflect the transactions below, which occur on January 6, 2020

1. Buy $15,000 worth of manufacturing supplies on credit
2. Issue $85,000 in stock
3. Borrow $63,000 from a bank
4. Pay $5,000 owed to a supplier
5. Receive payment of $12,000 owed by a customer
6. Purchase equipment for $44,000 in cash
7. Pay $7,000 owed to a supplier

What is the final amount in Accounts Receivable?

Note: Transaction amounts are provided in dollars but the balance sheet units are thousands of dollars.

Please specify your answer in the same units as the balance sheet (i.e., enter the number from your updated balance sheet).

Santana Rey created Business Solutions on October 1, 2020. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2020. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts.

In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Its transactions for January through March follow.

The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation.

1. The March 31 amount of computer supplies still available totals $2,095.
2. Prepaid Insurance coverage of $699 expired during this three-month period.
3. Lyn Addie has not been paid for seven days of work at the rate of $155 per day.
4. Prepaid rent of $2,655 expired during this three-month period.
5. Depreciation on the computer equipment for January 1 through March 31 is $1,090.
6. Depreciation on the office equipment for January 1 through March 31 is $210.
7. The March 31 amount of merchandise inventory still available totals $574.

2. Post the journal entries in part 1 to the accounts in the company’s general ledger. Note: Begin with the ledger’s post-closing adjusted balances as of December 31, 2020.

Rivera Company has several processing departments. Costs charged to the Assembly Department for November 2020 totaled $2,283,744 as follows.

Production records show that 35,200 units were in beginning work in process 30% complete as to conversion costs, 661,000 units were started into production, and 25,400 units were in ending work in process 40% complete as to conversion costs. Materials are entered at the beginning of each process.

(a)

Determine the equivalent units of production and the unit production costs for the Assembly Department. (Round unit costs to 2 decimal places, e.g. 2.25.)

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(b)

Correct answer iconYour answer is correct.

Determine the assignment of costs to goods transferred out and in process.

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(c)

Prepare a production cost report for the Assembly Department. (Round unit costs to 2 decimal places, e.g. 2.25 and other answers to 0 decimal places, e.g. 125.)

Santana Rey created Business Solutions on October 1, 2020. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2020. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts.

In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Its transactions for January through March follow.

The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation.

1. The March 31 amount of computer supplies still available totals $2,095.
2. Prepaid Insurance coverage of $699 expired during this three-month period.
3. Lyn Addie has not been paid for seven days of work at the rate of $155 per day.
4. Prepaid rent of $2,655 expired during this three-month period.
5. Depreciation on the computer equipment for January 1 through March 31 is $1,090.
6. Depreciation on the office equipment for January 1 through March 31 is $210.
7. The March 31 amount of merchandise inventory still available totals $574.

Truck Hire Pty Ltd (Truck) is a company that hires out large machinery. Since January 2020 the company has been in a difficult financial position. The Board of Truck have passed a resolution to sell some of the assets to reduce their debt.

Sally and Tom are two shareholders of Truck, they obtained a valuation report that shows the assets have been sold off at a significant undervalue in breach of s 180 of the Corporations Act 2001 (Cth).

Advise Sally and Tom whether the court will grant them leave to bring a statutory derivative action under ss 236/237 of the Corporations Act 2001 (Cth).

Truck Hire Pty Ltd (Truck) is a company that hires out large machinery. Since January 2020 the company has been in a difficult financial position. The Board of Truck have passed a resolution to sell some of the assets to reduce their debt.

Sally and Tom are two shareholders of Truck, they obtained a valuation report that shows the assets have been sold off at a significant undervalue in breach of s 180 of the Corporations Act 2001 (Cth).

Advise Sally and Tom whether the court will grant them leave to bring a statutory derivative action under ss 236/237 of the Corporations Act 2001 (Cth).

The Pat Company has estimated its activity for May 2020. Selected data from these estimated amounts are as follows:

Sales $350,000

Gross Profit (based on sales) 30%

Increase in trade A/R during May $10,000

Change in A/P during May $0

Increase in inventory during May $5,000

Variable selling and administrative expenses includes a charge for uncollectible accounts of 1% of sales. Depreciation expense of $20,000 per month is included in fixed selling and administrative expenses.

What are the estimated cash receipts from operations for May?

Select one:

a. $ 350,000

b. $ 360,000

c. $ 340,000

d. $ 336,500