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The following adjustments have not been made in the accounts:
1. Inventory on hand at 30 June 2014 valued at $94,250.
2. Goods worth $5,000 which had been ordered FOB shipping point have not yet been received.
3. The company estimates that 2% of accounts receivable will be uncollected.
4. It was discovered that $780 for office equipment had been charged in error to the purchases account on 1st July 2013.
5. Depreciation of buildings, delivery vehicles and office equipment is undertaken using the straight-line method. The useful life of the delivery vehicle is 10 years with a residual value of $500. The useful of the office equipment is 3 years with zero residual value. The office equipment was purchased on 1st January 2014.
6. Buildings have 20 years of useful life with $8,900 residual value.
7. Interest expense accrued, $325.
8. Unexpired insurance, $130.
9. The shareholders are to be paid a dividend of $22,750 in the current year.
10. The note receivable is a 6 month note issued on 1st January 2014 at 5% per annum. The maker of the note has formally indicated that he will not honor the note.
Required:
1. Prepare a worksheet and make the relevant adjustments in the worksheet.
2. Prepare the income statement for the year ended 30 June 2015 in accordance with GAAP.
3. Prepare the statement of retained earnings for the year ended 30 June 2015.
4. Prepare the statement of financial position as at 30 June 2015 in accordance with GAAP.
Discuss the performance of this company using appropriate rations
WARNING
Possession ofsmart phones or other electronic devices containing course-related materials during the exam is a violation of the Academic Integrity Policy and subjects the student to dismissal from ADU.
Signature of Students: ____________________________________
Student Name
Student ID No.
ACC482 Financial Accounting
Course Code and Title
Dr Robert Ochoki Nyamori
Course Instructor
Course Section
14th February 2018
Date and Duration of the Exam
Instructions to Students:
·
You must put your ID on the desk in front of you.
· You must sign the attendance sheet.
· You must not cheat: do not copy from another paper, ask for or give assistance, or carry any documents related to the exam. Any violation of the rules will result in your ejection from the examination room and dismissal from ADU.
· If you have a question, raise your hand and wait until the proctor acknowledges you.
· Roving Proctors, if exist, will visit your class at regular intervals.
· You should respect proctors who will have the authority to dismiss you out of the exam room if you misbehave.
· You should keep your eyes on your own paper.
· You are not allowed to take the examination paper out of the examination room, or take photos of the papers.
· You should not leave your seat without permission from the proctor.
· You are not allowed to hand in your answer scripts until 40 minutes have elapsed after the commencement of the examination.
· When you finish the exam, raise your hand and wait until the proctor acknowledges you and takes your exam paper.
· Students must leave the room quietly.
Assignment Two. Complete this exercise using a MS Excel spreadsheet. Marks will be awarded for neat and well-presented work in line with generally accepted accounting practice. Total 20%
The following are the ledger balances of Alamein Ltd as at
3
0 June 2014:
Alamein Ltd
Trial Balance as at 30 June 2014
Dr
Cr
Accounts receivable
$81,250
Accounts payable
40,700
Advertising expense
4,875
Stationery expenses
585
Share capital – ordinary
325,000
Notes receivable
15,792
Bank overdraft
10,650
Delivery vehicles (at cost)
30,875
Directors’ fees
8,125
Discount allowed
3,250
General expenses
5,070
Goodwill (at cost)
39,000
Income from investments
5,000
Insurance expense
625
Interest expense
3.120
Investments (at cost)
104,000
Land (at cost)
26,650
Buildings (at cost)
100,000
Electricity expense
1,075
Maintenance of vehicles expense
4,375
Office equipment (at cost)
3,250
Petty cash
130
Retained earnings 1/07/2013
34,585
Accumulated depreciation – delivery vehicles
5,850
Accumulated depreciation – buildings
4,550
Allowance for doubtful debts
975
Notes payable
27,650
Purchases
124,870
Sales
227,500
Income tax expense
27,650
Salaries and wages expense
26,260
Inventory 1/07/2013
74,750
682,460
682,460
The following adjustments have not been made in the accounts:
1. Inventory on hand at 30 June 2014 valued at $94,250.
2. Goods worth $5,000 which had been ordered FOB shipping point have not yet been received.
3. The company estimates that 2% of accounts receivable will be uncollected.
4. It was discovered that $780 for office equipment had been charged in error to the purchases account on 1st July 2013.
5. Depreciation of buildings, delivery vehicles and office equipment is undertaken using the straight-line method. The useful life of the delivery vehicle is 10 years with a residual value of $500. The useful of the office equipment is 3 years with zero residual value. The office equipment was purchased on 1st January 2014.
6. Buildings have 20 years of useful life with $8,900 residual value.
7. Interest expense accrued, $325.
8. Unexpired insurance, $130.
9. The shareholders are to be paid a dividend of $22,750 in the current year.
10. The note receivable is a 6 month note issued on 1st January 2014 at 5% per annum. The maker of the note has formally indicated that he will not honor the note.
Required:
1. Prepare a worksheet and make the relevant adjustments in the worksheet.
2. Prepare the income statement for the year ended 30 June 2015 in accordance with GAAP.
3. Prepare the statement of retained earnings for the year ended 30 June 2015.
4. Prepare the statement of financial position as at 30 June 2015 in accordance with GAAP.
5. Discuss the performance of this company using appropriate rations.
3
