Int test-2-FEB11018X-7-October-2014-Preliminary-answers-incl-calculations-IBEB

Interim test 2 Accounting FEB11018(X) 7 October 2014 - Preliminary answers
(Subject to typing errors, changes may still occur)
VERSION 1 VERSION 2
Question Question Answer Calculations/Remarks
FA/FIS
1 9 A Journal entry:
Supplies Expense 300
Supplies 300
2 10 A Price per unit:
June 1: 390/150 = 2.60
June 10: 585/200 = 2.925
June 15 = 630/200 = 3.15
June 28 = 510/150 = 3.40
When the FIFO method is used, COGS is the lowest which leads to the highest gross profit.
3 11 C
4 12 B The closing balance contains the Net Realizable Value of ledger account Accounts Receivable = 1,000,000 - 200,000 = 800,000
5 13 C
See p.381. This method takes existing balance of Allowance for Doubtful Accounts into account.
Journal entry:
Bad Debt Expense 12,900
Allowance for Doubtful Accounts 12,900
6 14 B See p.380.
Bad debts expense & the allowance are based on credit sales only.
7 15 C Depreciation expense 2014 & 2015 = (180,000 – 36,000) / 10 = 14,400 per year
Bookvalue 1/1/2016 = 180,000 – 2x14,400 = 151,200
Depreciation expense 2016 = (151,200 – 5,000) / 4 = 36,550
8 16 C Bookvalue year end = 360,000 – 144,000 = 216,000
Loss on disposal = 216,000 – 120,000 = 96,000
9 17 A Journal entry:
Amortisation cost 125,000
Patents 125,000
10 18 B