discussion report financial accounting

This choice involves $10,000 of cost forwork provided in December.Ex4: Which journal entrys reflects the following transaction?BOC received $5,000 of cash from a customer who took delive

ACCOUNTING AND AUDITING DEPARTMENT

DISCUSSION REPORT FINANCIAL ACCOUNTING 1

DESCRIPTION TABLE OF TASK OF MEMBERS

Numerical order

2Tran Thi Huong Giang

6Thieu Thi Thu Huong 20D1550167 exercises chapter 3

7Pham Quang Huy (Leader)

20D1550176 exercises chapter 4 + 1 exercises chapter 5 8Nguyen Thanh Huyen 20D1550187 exercises chapter 2

9Nguyen Thi Minh Khue

20D1550197 exercise chapter 5 + Power point

10Dinh Thi Nhat Le 20D1550205 exercises chapter 1 + 2 exercise chapter 2

EXERCISES OF CHAPTER 1: INTRODUCTION TOFINANCIAL ACCOUNTING

Ex1: Which of the following items reduces Net Income?A Revenues

B ExpensesC DividendsD Liabilities

B 1, 3 and 4C 2, 3 and 4D 3, 4 and 5

a, El Co pay its auditor $12,000 in December for all of the work the auditorperformed during the year.

b, El Co pay $10,000 in cash dividends in December

c, El Co pay its advertising agency $10,000 in December for ads that ran inDecember

d, El Co receives a $10,000 invoice from its lawyers for services performed inDecember The bill is due in January

e, El Co hires a new director in December to start work in January The directorwill be paid $10,000 per month

Which of the above transactions will generate $10,000 in December costs?A a,b,e

B b,eC c,dD a,e

=> Explain:

These are period costs We expense these costs when they are incurred,which is when people work for us This choice involves $10,000 of cost forwork provided in December.

Ex4: Which journal entry(s) reflects the following transaction?

BOC received $5,000 of cash from a customer who took delivery of goods thatoriginally cost BOC $4,000 to acquire

A Dr Cash 5,000 Cr Inventory 4,000 Cr Revenue 1,000 B Dr Cash 5,000

Cr Inventory 4,000

=> Explain:

We need two entries: (1) debit Cash and credit Revenue for the cashreceived for the delivery of goods and (2) debit Cost of Goods Sold and creditInventory for the original cost of the goods delivered to the customer

Ex5: What are Ending Retained Earnings in the table below?

Total Stockholder’s Equity

C 50D 20

=> Explain:

Net income = Revenues – Expenses = 190 – 140 = 50

Ending Retained Earnings = Beginning Retained Earnings + Net income – Dividends = 30 + 50 – 10 = 70

EXERCISES OF CHAPTER 2: CASH ANDRECEIVABLES

Ex1: During the year, A, which uses the allowance method, made an entry to writeoff a $2,000 uncollectible account Before this entry was posted, the balance inaccounts receivable was $100,000 and the balance in the allowance account was$5,000:

A $95,000 B $103,000C $97.000D $93,000

Ex2: Which of the following items should not be included in the Cash caption onthe balancesheet?

A Coins and currency in the cash register

B Checks from other parties presently in the cash registerC Amounts on deposit in checking account at the bankD Postage stamps on hand

D Bad debt expense is management's determination of which accounts will be senttothe attorney for collection

Ex4: B has outstanding accounts receivable totaling $6.5 million as of December31 and sales on credit during the year of $24 million There is also a credit balanceof $12,000 in the allowance for doubtful accounts If the company estimates that8% of its outstanding receivables will be uncollectible, what will be the amount ofbad debtexpense recognized for the year?

A $532,000B $520,000C $1,920,000D $508,000

Ex5: If the month-end bank statement shows a balance of $36,000, outstandingchecks are $12,000, a deposit of $4,000 was in transit at month end, and a checkfor $500 waserroneously charged by the bank against the account, the correctbalance in the bankaccount at month end is

A $27,500B $28,500C $20,500D $43,500

Ex6: X allowance for uncollectible accounts was $95,000 at the end of 2010 and$90,000 at the end of 2009 For the year ended December 31, 2010, X reportedbaddebt expense of $13,000 in its income statement What amount did Nenn debitto theappropriate account in 2010 to write off actual bad debts?

A $5,000B $8,000 C $13,000D $18,000

Ex7: An analysis of an entity's $170,000 accounts receivable at year-end resultedin a $6,000 ending balance for its allowance for uncollectible accounts and a baddebt expense of $2,000 During the past year, recoveries on bad debts previously

written off were correctly recorded at $500 If the beginning balance in theallowance for uncollectible accounts was $5,800, what was the amount of accountsreceivable written off as uncollectible during the year?

A $2,300 B $2,700C $1,700D $1,300

Ex8: The following details are related to a firm's banking transactions at 31stMarch 20X0 Balance as per bank statement $22,650; uncleared lodgements$3,110; unpresented cheques $6,290 Bank credit recorded twice by bank in erroras $650 Which balance for cash at bank should appear in the Balance Sheet as at31st March, 20X0?

A $12,600B $20,120C $18,820 D $25,180

Ex9: The cash book of James shows a credit balance of $1,550 Cheques of $50have been written to supplies but not yet cleared the bank; uncleared lodgementsamount to $228 The bank has accidentally credited James’s account with interestof $35 due to another customer A standing order of $350 has not been accountedfor in the general ledger What is the balance on the bank statement?

A.$1,307 CrB.$1,307 DrC.$2,043 DrD.$2,043 Cr

=> Explain:

$228 (Uncleared)

Ex10: GC’s bank statement shows a balance of $825 overdrawn The statement includes bank charges of $74 which have not been entered in the cash book There are also unpresented cheques totalling $540 and lodgements not yet credited of $156 In addition the bank statement erroneously includes a dividend receipt of $30belonging to another customer The bank overdraft in the statement of financial position should be:

A $699B $1,239C $1,165D $1,209

=> Explain:

Bank statement(825)(540) (Unpresent)

156 (Uncleared)(30) (Dividend receipt)

3 Unpresented cheques amount to $1,250.

4 A direct debit of $250 has not been recorded in the ledger accounts.

5 A bank error has resulted in a cheque for $97 being debited to Denna’ account instead of Ficcle’s account.

6 Cheques received but not yet banked amounted to $890.

The final balance in the cash book after all necessary adjustments should be:A $463 Dr

B $463 CrC $63 CrD $63 Dr

Ex12: At 30 September 20X4 a company's allowance for receivables amounted to$38,000, which was equivalent to five per cent of the receivables at that date.At 30 September 20X5 receivables totalled $800,000 It was decided to write off$30,000 of debts as irrecoverable The allowance for receivables required was to bethe equivalent of five per cent of receivables.

What should be the charge in the statement of profit or loss for the year ended 30September 20X5 for receivables expense?

A $42,000B $38,500C $70,500D $32,500

3 An estimation of probable repair costs under warranty claims.A 1, 2, and 3

B 2 onlyC 1 and 3 onlyD 1 only

=> Explain:

1,2 and 4 are examples of accounts payables of a business

Ex14: Which of the following best explains the purpose of an aged receivables analysis?

A To ensure that credit is not extended to unapproved customers or those that in the past have not paid.

B To ensure that credit does not exceed agreed limits.

C To keep track of outstanding debts and follow up those that are overdue

Ex15: A company has been notified that a customer has been declared bankrupt The company had previously provided for this doubtful debt Which of the following is the correct double entry?

EXERCISES OF CHAPTER 3: INVENTORIESEx1: You are preparing the financial statements for a business The cost of theitems in closing inventory is $41,875 This includes some items which cost $1,960and which were damaged in the transit You have estimated that it will cost $360 torepair the items, and they can be sold for $1,200.

What is the correct inventory valuation for inclusion in financial statements?A $36,832

B $35,755C $48,236D $40,755

=> Explain:

Initial inventory valuation: $41,875 Cost of damaged goods: (1,960)

NRV of damaged goods: (1,200 - 360) = 840

=> The correct inventory valuation: 41,875 - 1,960 + 840 = $40,755

Ex2: The price of inventories does not include any of the following:A Production-related storage costs

B Costs incurred as a result of normal waste of materialC Transportation cost

=> Explain:

Shipping costs incurred from transporting goods to consumers are included in selling costs and are not included in the price of inventory Meanwhile, transportation costs to bring inventory to the point of sale are included in the price of the inventory Storage costs and costs arising from the loss of raw materials are included in the cost of the inventory.

Ex3: Riley started the business in 2018 and uses the FIFO inventory method In2018, the company purchased 60,000 products at $20 and sold 40,000 products at$50 each In 2019, the company continued to buy 80,000 more products at $10 andsell 65,000 products at $55 each Let's calculate Riley's ending inventory value(thousands of dollars):

A 305$B 350$C 605$D 650$

=> Explain:

Riley’s uses FIFO attribution, so 20,000 products purchased from 2018 willbe sold out first in 2019 and 2018 The remaining products in stock are purchasedfrom 2019 at $10 each So the value of the remaining inventory will be equal to thetotal value of the remaining 40,000 products and is: 35,000 x $10 = $350(thousands of dollars)

Ex8: G bought a new printing machine The cost of the machine was $100.000.The installation costs were $10.000 and the employees received training on how touse the machine, at a cost of $5.000 Before using the machine to print customers'orders, a test was undertaken and the paper and ink cost $1.500.

What should be the cost of the machine in the company's statement of financialposition?

A $116.500B $110.000C $111.500D $106.500

Staff training cannot be capitalised as part of the cost of the asset.

Ex9: Mixter Co purchased an asset for $250.000 on 1.1.X0 It had an estimateduseful life of 4 years and it was depreciated using the straight line method On1.1.X2 Baxter Co revised the remaining estimated useful life to 10 years.

What is the carrying amount of the asset at 31.12.X3?A $125.000

B $112.500C $12.500D $137.500

=> Explain:

Carrying amount at 1.1.X3 = 250.000 - (250.000 × 2/4) = $125.000

New depreciation charge = Carrying amount/Revised useful life = $125.000/10years = $12.500

Carrying amount at 31.12.X3 = $125.000 - $12.500 = $112.500

Ex10: Jamie Limited purchased a car 4 years ago for £20,000 The car has nowbeen sold for £7,000 Accumulated depreciation on the car at the date of disposalamounted to £16,000 What is the profit or loss on disposal of the car?

A £3.000 lossB £3.000 profitC £7.000 lossD £7.000 profit

=> Explain:

Carring amount = 20.000 – 16.000 = 4.000Sold: 7.000 => Profit: 7.000 – 4.000 = 3.000

Ex11: A non-current asset (cost $20.000, depreciation $15.000) is given in partexchange for a new asset costing $25.000 The agreed trade-in value was $7.500.Which of the following will be included in the statement of profit or loss?A A profit on disposal $5.000

PLANT AND MACHINERY - CARRING AMOUNT

20X3 20X3

1 Jul Balance 150.000 30 Sep Transfer disposal account 30.000

1 Jan Cash-purchase of plant 250.000 30 Jun Balance 400.000

The company's policy is to charge depreciation at 20% per year on the reducingbalance basis, with proportionate depreciation in the years of purchase anddisposal What should be the depreciation charge for the year ended 30 June 20X4?A $50.500

B $63.500C $59.500D $61.500

=> Explain:

Ex13: Bertie Limited bought a small factory building 14 years ago for £150,000.Accumulated depreciation on this building for the 14 years stands at £42,000 Thesmall factory building has just been sold and this sale generated a profit ondisposal of £92,000 What was the cash inflow from the disposal of this non-current asset?

A £42.000B £92.000C £200.000C £242.000

=> Explain:

Carring amount = 150.000 – 42.000 = 108.000

The cash inflow from the non-current asset disposal of £108,000 + £92,000 =£200,000.

Ex14: A non-current asset held for sale should be measured at:A Fair value less costs to sell

B The asset's carrying amount when originally classified as held for sale, less anyaccumulated depreciation since that date

C The lower of the asset's carrying amount when originally classified as held forsale and its fair value less costs to sell

D The higher of the asset's carrying amount when originally classified as held forsale and its fair value less costs to sell

Ex15: Company X bought an asset for 50000 on 1.1.X1 It had an estimated usefullife of 5 years and it was depreciated using the straight line method On 1.1.X4 XCo revised the remaining etstimated useful life to 4 years.

What is the carrying amount of the asset at 31.12.X4?A 15,000

B 20,000C 14.500D 13,000

=> Explain:

Carrying amount at 1.1.X4 = 50000 – (50000/5) x 3 = 20000Carrying amount at 31.12.X4= 20000 – ( 20000/4) = 15000

Ex16: Company X bought a machine with an estimated useful life of 9 years for 81,000 on 1.1.X1 the machine had a residual value of 9,000.

What are the ledger entries to record the depreciation charge for the machine in theyear ended 1.1.X5?

Dr

CrA Depreciation charge 8000

B 71,000C 59,000D 60,000

=> Explain:

Carrying value = 100,000 – 25,000 + 6,000 - 10,000 = 71,000

Ex18: X bought a new machine The cost of the machine was 100,000 Theinstallation costs were 10,000 and the training fee for employee costs 5,000 A testwas undertaken and the fee was 2,000.

What should be the cost of the machine in the company’s statement of financialposition?

A 117,000B 115,000C 112,000D 110,000

=> Explain:

Cost= 100,000+10,000+2,000 = 12,000

Ex19: Company X bought a super car 7 years ago for 10,000 The car has nowbeen sold for 9,000 Accumulated depreciation on the car at the date of disposalamounted to 6,000 What is the profit or loss on disposal of the car?

A 3.000 lossB 5.000 profitC 5.000 lossD 3.000 profit

=> Explain:

Carring amount = 10.000 – 6.000 = 4.000Profit = 9.000 – 4.000 = 5.000

Ex20: A machine was bought by a business in june 20X3 forCost 20,000Tax 500Total 20.500The business adopts a date of 31 december as its year end.It was sale 15,000 in June 20X7

It has been depreciated at 20% per year on the reducing method, charging a fullyear’s depreciation in the year of purchase and none in the year of sale.

What was the profit or loss on disposal of the machine during the year end 20X7?A Profit: 8606

B Profit: 6808C Profit: 6088D Profit: 8066

=> Explain:

Carrying amount at disposal = 20000 x (1-0,2) x (1-0,2) x (1-0,2) x (1-0,2) =8192Profit = 15000 – 8192 = 6808

EXERCISES OF CHAPTER 5: INTANGIBLE NON –CURRENT ASSETS

Ex1: Which of the following assets is an intangible asset?A Inventory

B Product C GoodwillD Car

Ex2: Which of the following statements, relating to intangible assets is / arecorrect?

A Research on market potential, prior to launching a product, can be capitalisedB Applied research, calculated to achieve a stated aim, can be capitalised.C An asset should never be capitalised if it has no physical existence

D A resource, though intangible, may be capitalised, if it qualifies to be capitalisedif it is identifiable and meets the capitalisation criteria