INTERNATIONAL ACCOUNTINGQuestion 1Dobbs Wholesale Antiques makes all sales under terms of FOB delivery point. The business usually ships inventory to customers approximately one week after receiving the order. For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods. If profits are already at an acceptable level, she delays shipment until January. If profits for the current year are lagging behind expectations, she ships the goods during December.Requirements1. Under Kathy Dobbs FOB policy, when should the business record a sale?2. Do you approve or disapprove of Kathy Dobbs manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason. If you disapprove, identify a better way to decide when to ship goods. (There is no accounting rule against Kathy Dobbspractice.)Answer(TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)Question 2: The accounts of HaleyDavis Printing include Land, Buildings and Equipment HaleyDavis has a separate accumulated depreciation account for each asset. During the year, the business completed the following transactions:Jan 1Traded in motocarrier with accumulated depreciation of 90000 (cost of 130000) for similar new equipment with a cash cost of 176000. HaleyDavis received a tradein allowance of 70000 on the old equipment and paid the remainder in cash.Jul 1Sold a building that cost 550000 and that had accumulated depreciation of 250000 up to 31 December of the preceding year.Depreciation is calculated on a straightline basis. The building has a 40year useful life and a residual value of 50000. HaleyDavis received 100000 cash, with the balance of 600000 as a loan receivableOct 31Purchased land and a building for a lump sum payment of 300 000. An independent expert valued the land at 115 000 and the building at 230000.Dec 31 Recorded depreciation as follows:Motocarrier Equipment has an expected useful life of 1 million kilometers and an estimated residual value of 26000, Depreciation is units of production. During the year, HaleyDavis drove his truck 150 000 kilometers.Depreciation on buildings is straight line. The new building has a 40year useful life and a residual value equal to 20000Dec 31 Revalued the recently purchased land to a figure of 115 000. The building was revalued to a figure of 280000Requirement: Record the transactions in HaleyDavis’s journal.ANSWER:(TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)Question 3Case 1: Big Ted sells on credit. When a customer account becomes three months old, Big Ted converts the account to a bill receivable and immediately discounts the bill to a bank. During 2013, Big Ted completed these transactions:Aug 29 Sold goods on credit to V. Moyer, 5 000Dec 1Received a 5 000, 60day, 10% bill from Moyer in satisfaction of his pastdue account receivable.16 Sold the Moyer bill by discounting it to a bank with discount interest rate of 15%Requirement: Record transactions in Big Ted’s journal(TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)Case 2: On 1 May 2014, Big Ted¬ issues 9%, 20year debentures with a maturity value of 200000. The deben¬tures sell at 95 and pay interest on 1 May and 1 November. Big Ted amortises debenture discounts by the straightline method.Requirements1. Journalise the issue of the debentures on 1 May 2014.2. Journalise the halfyearly interest payment and amortisation of debenture discount on 01 November 2014.3. Journalise the interest accrual needed on 31 December 2014 and amortisation of debenture discount4. Journalise the interest payment on 1 May 2015 and amortisation of debenture discount(TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)Question 4: The accounts of Coles include Land, Building and Equipment. Coles has a separate accumulatou account for each asset. During the year of 2011: the business completed the following transactions. Jan 1: Traded in old equipment with accumulated depreciation of 50,000 (cost of 180,000) for similar new equipment with a cash cost of 176,000Jan 1: Sold a building that cost 550.000 and that had accumulated depreciation of 250,000 up to 31 December of the preceding year. Coles received 100,000 of cash, with the balance of 200,000 as a loan receivable. Oct 31: Purchased land and a building for a lump sum payment of 300,000. An independent expert valued the land at 105,000 and the building at 210,000. Dec 30: Revalued the recently purchased land on 31 Oct 201N to a figure of 105,000. The building was not revalued. Dec 31: Recorded depreciation as follows: Equipment traded on 1 Jan 201N has an expected useful life of 1 million units of output and an estimated residual value of 20,000. Depreciation is unit of production. During the year, Coles produced 150,000 units of output. Depreciation on building purchased on 31 Oct 201N is straight line. The new building has a 40year useful life and a residual value equal to 50,000. Requirement: Record the transactions in Coles journal. Explanations are NOT required.ANSWER:(TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)Question 5: Diesel Luxury uses the percentage of sales method for bad debts. The business completed the following transactions during 201X: Jan 05: Sold inventory to Peter Pan on cash of 2,000. Ignore cost of salesJan 17: Sold inventory to Mitch Johnson, 600, on account. Ignore cost of sales. Jun 29 Wrote off the: Mitch Johnson account as bad debt after repeated efforts to collect from him. Aug 6: Received 600 from Mitch Johnson, along with a letter stating his apology for paying late (reinstated Mitch Johnsons account in full and recorded the cash collection) Dec 31 Made a compound entry to write off the following account as bad debt: Bernard Klaus, 1,700; Marie Monet, 1,300. Dec 31: Estimated that bad debt expense for the year was 1% on credit sales and recorded that amount as expense. Total sales were 680,000 (including cash sales of 200,000). Use the allowance method.Dec 31 Made the closing entry for bad debt expense. Requirements:Record the transactions in the general journal (explanation are NOT tequila)(TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)Question 6: Angle Studio created a 350 imprest petty cash fund. During the month, the Tuna custodia signed petty cash slip as follows: Petty cash slip noItemAccount debitedAmount1Delivery of albums to customersDelivery expense252Mail pakagePostage expense153NewsletterSupplies expese354Key to closetMiscellaneous expense555Computerjump driveSupplies expense80Cash in the fund total 127 so 13 is missing.Requirement: Prepare the general journal entries to:(a) Create the petty cash fund.Dr. Petty cash 350Cr. Cash350(b) Record its replenishments. (TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)Explanations are NOT required.Question 7: On 1 May 201N, Ain issued 9%, 20year debentures with a maturity value of 200,000. The debentures sell at par value and pay interest on 1 May and 1 November. Requirements:1. Journalize the issue of the debentures on 1 May 201N. 2. Journalize the halfyearly interest payment on 1 November 201N. 3. Journalize the interest accrual needed on 31 December 201N. 4. Journalize the interest payment on 1 May 201N+1.(Explanations are NOT required)(TẢI TÀI LIỆU ĐỂ XEM BÀI GIẢI)
INTERNATIONAL ACCOUNTING Question Dobbs Wholesale Antiques makes all sales under terms of FOB delivery point The business usually ships inventory to customers approximately one week after receiving the order For orders received late in December, Kathy Dobbs, the owner, decides when to ship the goods If profits are already at an acceptable level, she delays shipment until January If profits for the current year are lagging behind expectations, she ships the goods during December Requirements Under Kathy Dobbs' FOB policy, when should the business record a sale? Do you approve or disapprove of Kathy Dobbs' manner of deciding when to ship goods to customers and record the sales revenue? If you approve, give your reason If you disapprove, identify a better way to decide when to ship goods (There is no accounting rule against Kathy Dobbs'practice.) Answer The business sale transactions are recorded when the goods have been shipped In the given case, the company ships the goods only when the feel that the sales is lagging behind They not ship the goods if the company has achieved the sales target for the year In this case the company ships the goods in January instead of December It can be said as that this practise that is practiced by Dobbs not ethical As the company should focus on delivering the goods to its clients as soon as possible Question 2: The accounts of Haley-Davis Printing include Land, Buildings and Equipment Haley-Davis has a separate accumulated depreciation account for each asset During the year, the business completed the following transactions: Jan Traded in moto-carrier with accumulated depreciation of $90000 (cost of $130000) for similar new equipment with a cash cost of $176000 Haley-Davis received a trade-in allowance of $70000 on the old equipment and paid the remainder in cash Jul Sold a building that cost $550000 and that had accumulated depreciation of $250000 up to 31 December of the preceding year Depreciation is calculated on a straight-line basis The building has a 40-year useful life and a residual value of $50000 Haley-Davis received $100000 cash, with the balance of $600000 as a loan receivable Oct 31 Purchased land and a building for a lump sum payment of $300 000 An independent expert valued the land at $115 000 and the building at $230000 Dec 31 Recorded depreciation as follows: Moto-carrier Equipment has an expected useful life of million kilometers and an estimated residual value of $26000, Depreciation is units of production During the year, Haley-Davis drove his truck 150 000 kilometers Depreciation on buildings is straight line The new building has a 40-year useful life and a residual value equal to $20000 Dec 31 Revalued the recently purchased land to a figure of $ 115 000 The building was revalued to a figure of $280000 Requirement: Record the transactions in Haley-Davis’s journal ANSWER: Haley-Davis Printing 31/12/2011 Date Jan Jul Oct 31 Accounts Dr Accumulated depreciation, moto-carrier Dr New equipment Cr Equipment Cr Gain on diposal Cr Cash Dr Depreciation expense Cr Accumulated depreciation, building Dr Accumulated depreciation, building Dr Cash Dr Bills receivable Cr Building Cr Gain on disposal Dr Land Dr Building Cr Cash Dr $90,000 $176,00 Cr $130,000 $30,000 $106,000 $6,250 $6,250 $256,25 $100,00 $550,000 $600,00 $406,250 $100,00 $200,00 $300,000 Dec 31 $22,500 Dr Depreciation expense Cr accumulated depreciation, Equipment Dr Depreciation expense, building Cr accumulated depreciation, building Dr Land Cr Revaluation surplus Dr Accumulated depreciation, building Cr Buiding Dr Buiding Cr Revaluation surplus Dec 31 $22,500 $750 $750 $15,000 $15,000 $750 $750 $80,750 $80,750 Question Case 1: Big Ted sells on credit When a customer account becomes three months old, Big Ted converts the account to a bill receivable and immediately discounts the bill to a bank During 2013, Big Ted completed these transactions: Aug 29 Dec Sold goods on credit to V Moyer, $5 000 Received a $5 000, 60-day, 10% bill from Moyer in satisfaction of his past-due account receivable 16 Sold the Moyer bill by discounting it to a bank with discount interest rate of 15% Requirement: Record transactions in Big Ted’s journal Big Ted 31/12/2013 Date Aug 29 Dec Dec 16 Accounts Dr Accounts receivable Cr Sales revenue Dr Bills receivable Cr Accounts receivable Dr Cash Dr Interest expense Cr Bills receivable Dr $5,000 Cr $5,000 $5,000 $5,000 $4,250 $750 $5,000 Case 2: On May 2014, Big Ted issues 9%, 20-year debentures with a maturity value of $200000 The debentures sell at 95 and pay interest on May and November Big Ted amortises debenture discounts by the straight-line method Requirements Journalise the issue of the debentures on May 2014 Journalise the half-yearly interest payment and amortisation of debenture discount on 01 November 2014 Journalise the interest accrual needed on 31 December 2014 and amortisation of debenture discount Journalise the interest payment on May 2015 and amortisation of debenture discount Big Ted 31/12/2014 Date May Accounts Dr Cash Dr Discount on Debentures Cr Debentures payable Nov Dr Interest expense Cr Cash Cr Discount on Debentures Dec 31 Dr Interest expense Cr Interest payable Cr Discount on Debentures May Dr Interest payable 2015 Dr Interest expense Cr Discount on Debentures Cr Cash Dr $190,00 $10,000 $9,250 Cr $200,000 $9,000 $250 $3,083.3 $3,000 $83.3 $3,000 $6,166.7 $166,7 $9,000 Question 4: The accounts of Coles include Land, Building and Equipment Coles has a separate accumulatou account for each asset During the year of 2011: the business completed the following transactions Jan 1: Traded in old equipment with accumulated depreciation of $50,000 (cost of 180,000) for similar new equipment with a cash cost of $176,000 Jan 1: Sold a building that cost $550.000 and that had accumulated depreciation of $250,000 up to 31 December of the preceding year Coles received $100,000 of cash, with the balance of $200,000 as a loan receivable Oct 31: Purchased land and a building for a lump sum payment of $300,000 An independent expert valued the land at $105,000 and the building at $210,000 Dec 30: Revalued the recently purchased land on 31 Oct 201N to a figure of $105,000 The building was not revalued Dec 31: Recorded depreciation as follows: - Equipment traded on Jan 201N has an expected useful life of million units of output and an estimated residual value of $20,000 Depreciation is unit of production During the year, Coles produced 150,000 units of output - Depreciation on building purchased on 31 Oct 201N is straight line The new building has a 40-year useful life and a residual value equal to $50,000 Requirement: Record the transactions in Coles' journal Explanations are NOT required ANSWER: Coles' journal Date Jan 31/12/2011 Accounts Dr Accumulated depreciation, equipment Dr $50,000 Dr New equipment $176,00 Cr Equipment Jan Cr Gain on diposal Dr Accumulated depreciation, building Dr Cash Dr Bills receivable Cr $180,000 $46,000 $250,00 $100,00 Cr Building $550,000 $200,00 Oct 31 Dr Land $100,00 Dr Building Cr Cash Dec 30 Dr Land Dec 31 Cr Revaluation surplus Dr Depreciation expense, equipmet $200,00 $300,000 $5,000 $5,000 $23,400 Cr accumulated, equipment Dr Depreciation expense, building $23,400 $625 Cr accumulated, building $625 Question 5: Diesel Luxury uses the percentage of sales method for bad debts The business completed the following transactions during 201X: Jan 05: Sold inventory to Peter Pan on cash of $2,000 Ignore cost of sales Jan 17: Sold inventory to Mitch Johnson, $600, on account Ignore cost of sales Jun 29 Wrote off the: Mitch Johnson account as bad debt after repeated efforts to collect from him Aug 6: Received $600 from Mitch Johnson, along with a letter stating his apology for paying late (reinstated Mitch Johnson's account in full and recorded the cash collection) Dec 31 Made a compound entry to write off the following account as bad debt: Bernard Klaus, $1,700; Marie Monet, $1,300 Dec 31: Estimated that bad debt expense for the year was 1% on credit sales and recorded that amount as expense Total sales were $680,000 (including cash sales of $200,000) Use the allowance method Dec 31 Made the closing entry for bad debt expense Requirements: Record the transactions in the general journal (explanation are NOT tequila) Diesel Luxury 31/12/201X Accounts Date Jan 05 Dr Cash Jan 17 Cr Sales revenue Dr Accounts Receivable Jun 29 Cr Sales revenue Dr Allowance for doubtful debt Aug Cr Accounts Receivable Dr Accounts Receivable Dr $2,000 $2,000 $600 $600 $600 $600 $600 Cr Allowance for doubtful debt Dr Cash Dec 31 Cr Accounts Receivable Dr Allowance for doubtful debt $600 $600 $600 $3,000 Cr Accounts Receivable Bernard Klaus Dec 31 Cr Accounts Receivable, Marie Monet Dr bad debt expense $1,700 $1,300 $4,800 Cr Allowance for doubtful debt Dec 31 Dr Income summary Cr bad debt expense Cr $4,800 $4,800 $4,800 Question 6: Angle Studio created a $350 imprest petty cash fund During the month, the Tuna custodia signed petty cash slip as follows: Petty cash slip no Item Account debited Delivery of albums Delivery expense Amount 25 to customers Mail pakage Newsletter Key to closet Postage expense Supplies expese Miscellaneous 15 35 55 Computerjump expense Supplies expense 80 drive Cash in the fund total $127 so $13 is missing Requirement: Prepare the general journal entries to: (a) Create the petty cash fund Dr Petty cash Cr Cash $350 $350 (b) Record its replenishments Dr Delivery expense $25 Cr Cash $25 Postage expense $15 Cr Cash $15 Supplies expese $35 Cr Cash $35 Miscellaneous expense $55 Cr Cash $55 Supplies expense $80 Cr Cash $80 Dr Cash short and over $20 Cr Cash $20 Explanations are NOT required Question 7: On May 201N, Ain issued 9%, 20-year debentures with a maturity value of $200,000 The debentures sell at par value and pay interest on May and November Requirements: Journalize the issue of the debentures on May 201N Journalize the half-yearly interest payment on November 201N Journalize the interest accrual needed on 31 December 201N Journalize the interest payment on May 201N+1 (Explanations are NOT required) Ain Date May 31/12/201N Accounts Dr Cash Dr $200,00 Cr Nov Cr Debentures payable Dr Interest expense Dec 31 Cr Cash Dr Interest expense $3,000 Cr Interest payable Dr Interest payable $3,000 May 201N+1 Dr Interest expense Cr Cash $9,000 $200,000 $9,000 $3,000 $6,000 $9,000