SolutionReleased_7111AFE_Exam_S2_2008

SolutionReleased_7111AFE_Exam_S2_2008 - 7IIIAFE Final...

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Unformatted text preview: 7IIIAFE Final Examination Semester 2, 2008 Question 1 {26 marks} (a) Write the journal entries for the folloWing transactions (Explanations are not required): (i) On 12 lanuary 2006, ABC Ltd” received $5,000 in advance against a contract to provide consulting service to one of its clients (2 marks) (ii) On 15 January 2006, Honor Enterprise received $3,200 from a customer on account. (2 marks) ,, /"'\ Ahab) an: 35 a... 373-90 (2 a/ “is @Wfiué/fiw cit“. 3 0&3) t _ (b) Post the following j outnal entries to Cash at Bank, Accounts Payable and Accounts Receivable accounts and show the closing balance for each account at its normal position. You will be marked only for the correct account balance shown at its normal position. (7 marks) (i) 2 Jan 2008: Cash at Bank Dr.‘ 67 000 Motor Vehicle Dr.‘ 29 000 R. Robinson, Capital Cr". 96 000 (ii) 4 Jan 2008: Inventory Dr: 35 000 Cash at Bank Cry. 13 000 Accounts Payable Cr. 22 000 (iii) ‘5 Jan 2008: Cash at Bank Dr. 10 500 Accounts Receivable Dr. 20 500 Sales Revenue Cr 31 000 (iv) 9 Jan 2008: Accounts Payable Dr 5 800 Cash at C1. 5 800 (v) 11 January 2008 : Cash at Bank Dr: 11 850 Sales Revenue Cr; 11 850 I ' 'Page 2 of15 Please Turn oven 7111AFE Final Examination ‘ Semester 2, 2008 (Vi) 13 Ianuaxy 2008: " Prepaid Rent Dr 3 600 . Cash at Bank CI' 3 600 (vii) 17 IanuaIy 2008: Acoounts Payable Dr 2 000 Pm'chase Returns and Aflowances Cr 2 000 (viii) 21 January 2008: J Sales Returns and Allowances DI ‘. 1 500 f Accounts Receivable CI: 1 500 4 (ix) 2.3 January 2008: Accounts Payable DI“ 3 825 Cash at Bank Cr. 3 825 Cash at Bank Please Tum overx. _ "'2. 3 ' '7JHAFE Final Examination Semester 2, 2008 Accounts Payable Mos, [Mi 5gp goag gyaa W— ; r. . mags (c) (i) What is the going concern assumption? How does it affect preparation of financial statements? (3 marks) (ii) Why is intemal control necessaxy in a firm? (2 marks) (iii) What are the advantages of" perpetual inventory system over periodic inventmy system? (3 marks) Page 4 g 15 Please Turn over. 7111AFE Final Examination Semester 2, 2 008 s l ; _ "‘\ b , 4"), 4‘ #44 -1; ’ m_ I L—L u t £0 " i" 40m. -‘ K 6" 4‘ a h-u’zf-i. __ 4‘ ‘ 1‘ l ’ ' (d) Journalise the adjusting entry needed on 31 December, the end of the current accounting period, for each of" the following independent cases affecting Metz Marketing Concepts” (2 + 2 marks) (i) Each Friday, Metz pays employees for the current week’s work The amount of the payroll is $5,000 for a five-day workweek The current accounting period ends on Thursday a O f 7 b "‘ 4:. 25F. 09 O i __1._._- ,; -_ Cr 01> (ii) Details of Prepaid Insurance are shown in the account: Prepaid Insulance April 30 3,000 i ' Metz pays insurance each year on 30 April. Record insurance expense for the year ended December 31 ' ‘ é%?owdal>g : (9&0 7 \2- Pégéiiiof ‘_1-5_ ' Please Turn over. 711mm Final Examination Semester 2, 2008 (e) State 3L0 differences between an adjusted trial balance and a post—closing trial balance (3 marks) » A not . :-.= .-i- ma; “yum m... .;'~fuu:rnlv;.n;..fih;.:.“wank—wankluau-fithilElkiiv-Ii.Manic32%“:T-‘Q-‘i-‘J'JuuuumuVLF-K..»'a»L.-.‘-¢{5:lfi m;,;;;,-,_,r.-i;g-v_=~ ._,.,:-:,-=:>:i=1,r..s,,7-,.n..,.. .,.._-,..,_Ar ,.o.._,..,.a,.yt.w.-x 1 . (a) Belmont Software engaged in the following transactions during May. Amounts include GST at 10%, unless otherwise stated: May ‘7 Purchased inventory on credit terms of' 3/ l 0 net 60111, $2,200. 8 Returned half the inventory purchased on 7 May It was not the inventory ordered, 10 Sold goods for cash, $495 (cost, $250, excluding osr). 13 Sold inventory on credit terms of'2/ 15 11/45, $4,290 (cost, $1,800, excluding GS T). 16 Paid the amount owed on account from the purchase of'7 May, less the ‘“ return and the discount. Required: Journalise the prfecweding transactions on the books of Belmont Software under the perpetual inventory system Explanations are not required Leave a blank line between two consecutive journal entries. ( 16 marks) ,/' bum—WM Page 6 0f15' ' Please Turn over, 7111AFE Final Examination Semester 2, 2008 (b) A Samsonite outlet store, which uses the FIFO method, began August With 50 :_-.':1__1_I:1i_ts of inventory that cost $40 each” Duzing August, the store completed these nventory transactions: Please Tut n overu. 711MB? Final Examination Semester 2, 2008 Units Unit Cost Unit Sale Price Aug3 Sale.“ ‘. .. 40 $70 8 Purchase t .. 80 44 21 Sale. r 70 '73 .30 Purchase 20 48 Required: Determine the store’s cost of goods sold for August under periodic inventory system (10 marks). «fl Arms-die! Question 3 (22 marks! (a) Lost Pines Escape is a partnership, and its owners are considering admitting David Milano as a new partner On 31 juiy of‘the current year, the capital accounts ofthe three existing partners and their shares of'pr‘ofits and losses are as follows: Page 8 of 15 Please Turn over. 71 J IAFE Final Examination Semester 2, 2008 Cainital Profit-and-loss Ratio Eric Runyan $48,000 1/6 Sara Braden 64,000 1/3 Ken Maness 88,000 1/2 Required Iournalise the admission of'Milano as a paitner on 31 July for each ofthe following independent situations Explanations are not required Round at two decimal places (i) Milano pays Maness $114,000 cash to purchase Maness’s interest. (2 maiks) (ii) Milano invests $50,000 in the paitnership, acquiring a one-sixth interest in the business. (8 marks) Your working must show whethei any bonus is pa able '-—._._.... either to the old partners 01 to Miiano.‘ Page 9 0f15 N24'VLCd/Q L‘Yf’ C} ' Please Turn alien. - - 7111AEE Final Examination Semester 2, 2008 Explanations are not required Leave a blank line between two consecutive joumal entries. (12 marks) .. 67-0 ‘7 easgflfiirn flaw Accrueonabilmes .. ... ,.. ., .. i, ., 14,300 16,800 CNA’S t1 ansactions during 20X5 included the following: mm Purchase of'equipment . 55,000 Net profit ,. 31,600 Issue oflong-telm biil Issue of ordinary shares payable to bonow 32,000 for 105,000 Depreciation expense 17,700 Required: Prepale the operating activities section of the statement of cash flows of CNA Leasing Ltd fm the year ended 31 December 20X5 Use the indirect method, (13 maiks) , Nat flag? 53/4433 , given ___fi%%iéfl§%g$fl%éfifig¥fzflDé 3 (:> _______*_______ ‘ f asaa Page 12 of] 3 Please Turn over. Pratt Co. Iacobs Ltd bays’ sales inreceiVables...H .1 36 42 Inventory turnover 6 8 Gross profit percentage 49% 51% Net profit as apercentage of‘sales 7.2% 8 3% Times-interest—earned . 16 9 Return on equitym .. .1 32.3% 215% Return on assets 121.1% 164% Required: Write a report to Morgans’ investment committee Recommend one company’s shares over the other. State the reasons for your recommendation You must state the ratios that influence your recommendation. (13 marks) Rage-13 of 13 End of Examination _ ...
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SolutionReleased_7111AFE_Exam_S2_2008 - 7IIIAFE Final...

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