journal

2018  

march 1 cash account debit 350000   

margate bank 350000

dec 1 cash account debit 150000

sundi bank     150000

dec 31 interest expense(margate )       debit 41250

to accrual interest 41250

dec 31 interest expense (sundi) debit 5500

to accrued interest   5500

dec 31 profit and loss account debit 46750

to interest expense ( 41250+5500)        46750

2019

jan 1 sundi bank account debit 10000

accrued interest    debit 5500

to cash 15500

feb 1   sundi bank account debit 10000

interest expense    debit 5500

to cash 15500

march 1    sundi bank account debit 10000

interest expense    debit 5500

to cash 15500

march 1 margate bank account debit 50000

accrued interest debit    41250

interest expense debit 8250

to cash 99500

Requirement 2. Prepare the liabilities section of the balance sheet for Wholesale Pharmacies on

March ​1,2019 after all the journal entries are recorded. First, prepare an amortization schedule for the

Sandi Bank mortgage to March ​1, 2020.

Prepare the schedule for the first three​ payments, then the remaining months one at a time. ​(Round your answers to the nearest whole​ dollar.)

Review the related journal entries you prepared in Requirement 1

.

Now prepare the liabilities section of the balance sheet for

Wholesale Pharmacies on March ​1, 2019.

​(If a box is not used in the table leave the box​ empty; do not select a label or enter a​ zero.)

Review the amortization schedule you prepared above.

Transaction analysis and Financial Statements
After several months of planning, Ms. Gyamfua Boakye started Keep Safe Shop which is into
buying and selling the supplies of Covid-19. The following transactions occurred during the first
month.
Jun. 1 Started business with a cheque of GH₵17,000, cash of GH₵3,000.
2. Bought a shop for GH₵6,000 cheque.
3 Purchased fixtures and fittings for GH₵1,300 with cheque.
4 Bought nose masks for GH₵2,000 with cheque and carriage for GH₵50 cash.
5 Advertising expense GH₵100 paid by cash.
9 Bought face shields for GH₵1,500 and carriage GH₵30 with cash.
12 Bought nose masks GH₵3,200 and face shields GH₵6,000 from Combat Technology Ltd
on credit.
15 Sold nose mask for GH₵4,600 cash and face shield for 6,500 cheque.
16 Deposited GH₵1,000 cash into the bank.
20 Paid Combat Technology Ltd GH₵7,000 cheque and received a discount of GH₵700.
23 Ms. Boakye took GH₵250 cash for personal use.
25 Paid salaries for GH₵500 by cheque.
26 Paid electricity expense GH₵80 by cash.
27 Sold nose masks and face shield on credit to Nana Yaa at GH₵5,600.
28 Nana Yaa returned some of the face shield due to damages GH₵600.
30 Received a cheque of GH₵4,600 from Nana Yaa and her allowance of GH₵460.
Required:
a. Journalize the above transactions
b. Post the journal entries to their respective accounts and balance off the accounts
c. Extract the trial balance as at June 30, 2020
d. Prepare the Income Statement for the period ended June 30, 2020
e. Prepare the Statement of Financial Position as at June 30, 2020

Depletion

On July 1, 2019, Amplex Company purchased a coal mine for $2 million. The estimated capacity of the mine was 800,000 tons. During 2019, Amplex mines 10,000 tons of coal per month and sells 9,000 tons per month. The selling price is $30 per ton and production costs (excluding depletion and depreciation) are $8 per ton.

At the end of the mine's life, Amplex estimates that the present value of the cost to restore the land is $300,000, after which it can be sold for $100,000. Amplex also purchased some temporary housing for the miners at a cost of $170,000. The housing has an expected life of 10 years but is expected to be sold for $10,000 at the end of the mine's life. The housing is depreciated using the activity method. Amplex uses the FIFO cost flow assumption and its discount rate is 10%.

Required:

1. Compute the company's expenses included on the 2019 income statement. Round depletion and depreciation rate per ton to the nearest cent. Round your final answer to the nearest dollar.

   Total expenses, 2019	$
   Depletion rate	$  per ton
   Depreciation rate	$  per ton

2. Compute the cost of the company's inventory at December 31, 2019. Round your answer to the nearest dollar.

   Cost of inventory, 12/31/2019: $  

3. In January 2020, a new estimate indicated that the capacity of the mine was only 500,000 tons at that time. Compute the company's expenses included on the 2020 income statement if the company mines and sells 10,000 tons per month. Round the depletion rate to 2 decimal places. Round the depreciation rate to 3 decimal places and round final answer to the nearest dollar.

   Total expenses, 2020	$
   New depletion rate	$  per ton
   New depreciation rate (round to three decimal places)	$  per ton

Earlier this year, Terzetto Hot Tubs implemented a promotion where customers do not have to pay for their purchase for three years after the date of delivery (they sign a non-interest-bearing note instead). Because people have been unable to go on vacations, sales have been brisk. The typical hot tub sells for $8,000 (the “sticker price”) and customers would normally be charged 10% annual interest on any unpaid balance in their account.          

a.       Identify what is being “sold” or briefly discuss the separate performance obligations Terzetto should be considering for its sales of hot tubs. (One sentence or point form)

b.       Assuming a hot tub was delivered on June 1, prepare all of the journal entries that should be recorded on this day for a typical $8,000 hot tub, assuming the customer takes advantage of the “do not pay for three years” option. Please show your calculations or calculator inputs.   Assume the sticker price of $8,000 is based on a 25% mark-up on cost.

c.       Prepare all journal entries that should be recorded on December 31, 2020 regarding this note.

d.       The balance in Terzetto’s Allowance for Doubtful Accounts was $18,000 on January 1, 2020. Prior history indicates that Terzetto collects 97% of the payments so during the year, bad debts expense of $45,900 were recorded and write-offs were $65,000.   Now at the December 31, 2020 year-end, the controller estimates that due to the effect of covid on the economy, 5% of the $1,350,000 balance in receivables will probably be uncollectable. Prepare any adjusting entries that should be recorded at year-end.

e.       Briefly discuss (two or three sentences) why you agree or disagree with the current method of accounting used by Terzetto for bad debts. Support your answer with a reference to at least one foundational principle from the conceptual framework (excluding “full disclosure”)

Presented below is an aging schedule for the Ivan Company at December 31, 2020:

At December 31 2020, the unadjusted balance in Allowance for Doubtful Account is a credit of $10,000.

Instructions: Cut and paste the general journal below in your window and use it to journalize your entries to answer questions A, C, And D.

[A] Using information above, record the adjusting entry to adjust the allowance for doubtful accounts at December 31, 2020.

General Journal:

[B] What is the net (cash) realizable value of accounts receivable after the adjustment is made to record bad debt expense?

(please label answer clearly in your solution/window)

[C] Journalize the following events that occurred in 2021. If no journal entry is required please indicate that no entry is necessary. Use the general journal that you cut and paste in your solution to answer the question.

(1) March 1, a customer with an accounts receivable balance of $400 is deemed uncollectible.

      (2) May 1, a check for $400 is received from the customer above.

[D] Journalize the entry to adjust the allowance for doubtful accounts at December 31, 2021 assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of $1,400 and the aging schedule indicates that total estimated collectible accounts will be $36,700.

The following information relates to Susan’s Florist Shop at June 30, 2021, the end of its first year of operations. (All purchases were made for cash unless stated otherwise)

1. On July 2, 2020, Susan purchased equipment for $12,000. The equipment is expected to have a useful life of 8 years. The expected residual value is zero, and Susan will use straight-line depreciation.
2. On August 1, 2020, a one-year insurance policy was purchased for $1,740.
3. In January 2021, a corporate customer paid $2,080 as full payment for a one-year contract for fresh flowers to be delivered to its offices every Monday morning. At June 30^th, 26 of the required 52 deliveries had been completed.
4. On July 2, 2020, Susan purchased enough supplies to last the entire first year of operations for $4,400. At June 30, 2021, Susan counted the supplies on hand and calculated the cost, which amounted to $1,035.
5. Susan pays her store assistant on alternate Fridays. The last pay day in June was June 20^th and the first pay day after year end is July 4^th. The assistant worked 30 hours during this period of which 10 were in June and the rest in July. The assistant earns $11.80 per hour.
6. June 28 is a busy day and Susan has to make deliveries to numerous customers. On July 5, she reviews her June billings, and realizes that she made one large sale for $325 on June 30 for flowers that were delivered, but for which no invoice was issued. The sale was to a regular customer who will pay promptly when the invoice is sent.

Required:

1. For each transaction, prepare any adjusting entries required at June 30, 2021

2. Susan uses reversing entries. Prepare any reversing entries required for July 1, 2021

You are the audit supervisor of Seagull & Co and are currently planning the audit of your existing client, Eagle Heating Co., for the year ending December 31, 2020. Eagle manufactures and sells heating and plumbing equipment to a number of home improvement stores across the country.

Eagle has experienced increased competition and is facing significant pressure to meet sales targets. As a result, it has decreased the selling price of its products significantly since September 2020. The finance director has informed your audit manager that he expects increased inventory levels at the year end. He also notified your manager that one of Eagle's key customers has been experiencing financial difficulties. Therefore, Eagle has agreed that the customer can take a six-month payment break, after which payments will continue as normal. The finance director does not believe that any allowance is required against this receivable.

In October 2020, the financial controller of Eagle was dismissed. He had been employed by the company for over 20 years, and he has threatened to sue the company for unfair dismissal. The role of financial controller has not yet been filled and so his tasks have been shared between the existing finance department team. In addition, the accounts payable supervisor left in August and a replacement has been appointed in the last week. However, for this period no supplier statement reconciliations or accounts payable reconciliations were performed.

You have undertaken a preliminary analytical review of the draft year-to-date statement of profit or loss, and you are surprised to see a significant fall in administration expenses.

Required

Discuss the factors that will impact the risk of material misstatement at the financial statement and account levels in planning the audit of Eagle.

The following budgeted income statement has been prepared for XY company for the months of January to April 2020

Jan Feb Mar April

Le000 Le000 Le000 Le000

Sales 60.0 50.0 70.0 60.0

Costs of production 50.0 55.0 32.5 50.0

(increase)/decrease in inventory (5.0) (17.5) 20.0 (5.0)

Cost of sales 45.0 37.5 52.5 45.0

Gross Profit 15.0 12.5 17.5 15.0

Administration and selling overhead (8.0) (7.5) (8.5) (8.0)

7.0 5.0 9.0 7.0

Additional information:

40% of the production cost relates to direct materials. Materials are bought in the month prior to the month in which they are used. Purchases are paid for one month after purchase.
30% of the production cost relates to direct labour which is paid for when it is used.
The remainder of the production cost is produced overhead.
Le 5,000 per month is a fixed cost which includes Le 30,000 depreciations. Fixed production overhead costs are paid for when incurred.
The remaining overhead is variable. The variable production overhead is paid 40% in the month of usage and the balance, one month later. Unpaid variable production overhead at the beginning of January is Le 90,000.
The administration and selling costs are paid quarterly in advance on 1st January, 1st April,1st July, and 1st October. The amount payable is Le 15,000 per quarter.
All sales are on credit. 20% of receivables are expected to be paid in the month of sale and 80% in the month following. Unpaid trade receivables at the beginning of January were Le 44,000.
The Company intends to purchase equipment costing Le 30,000 in February which will be payable in March.
The bank balance on 1st January 2020 is expected to be Le 5,000 overdrawn.
You are required to prepare the cash budget for the first quarter of 2020.   

sales are expected to increase by 20% from $7.2 million in 2019 to $8.64 million in 2020. Its assets totaled $2 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 4%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Broussard's additional funds needed for the coming year. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as $1,200,000. Do not round intermediate calculations. Round your answer to the nearest dollar.