Financial Accounting CPA Incomplete Records

Q1:

The following comparable balance sheet for Ibrahim Stores for the year ended Dec.31,
2012 :
Accounts Dec. 31, 2012 Jan.1, 2012
Cash 84,500 $ 33,000 $
Notes receivable 21,000 20,000
Accounts receivable 95,000 74,000
Inventory 150,000 160,000
Prepaid expenses 10,000 12,000
Short term investment 10,000 40,000
Building & Equipment (net ) 120,000 100,000
Total Assets 490,500 439,000
Accounts payable 133,000 135,000
Interest payable 900 --
Expenses payable 3,000 2,000
Bonds payable - 50,000
Capital 280,000 200,000
Retained earning 73,600 52,000
Total liabilities & owners' equity 490,500 439,000

An analysis of cash receipts and disbursements discloses the following:

Receipts Disbursement
New capital investment 80,000 $ Trade creditor – 210,000 $
Accounts Pay.
Trade debtors – Notes and 230,000 Expenses 70,000
accounts
Cash sales 65,000 Dividends 40,000
N/R discounted – Face value 19,500 Equipment 28,000
20000
10% Note issued to bank dated 30,000 Bonds 50,000
March 31, 2012
Sales of investment 25,000

Required :
1) Prepare an income statement supported by schedules showing computation of revenue
and expenses for the year ended in Dec. 31, 2012.
2) Prepare the retained earnings statement for the year ended in Dec. 31, 2012
 Financial Accounting CPA Incomplete Records

Q2: The following the balance sheet at the end of year 1and 2, Summary of operations
for year 2 and additional information for Joe Co. a single proprietorship
Assets End End Liabilities & capital End End
Year 1 Year 2 Year 1 Year 2
Cash $ 4,680 ? A/ P $ 9,400 8500
N/R From Suppliers (no change 12,000 12000 Accrued Salaries Payable 1,100 1,900
during the year)
A/R 4,000 7,600 Unearned rent Revenue 600 450
Accrued interest Receivable 320 530 Joe capital 55,900 ?
Inventory 18,000 25,000
Unexpired insurance 500 700
Building & Equipment 40,000 ?
Less: Accu. Depreciation (12,500) ?
Total assets 67,000 ? Total Liabilities & capital 67,000 ?
Joe Com.
Summery of operation for year 2
(from cash and supplementary records )
Cash receipts
Collection on accounts Receivable 35,000 $
Sales for cash 42,000
Interest revenue 540
Rent revenue 3,600
Total Cash receipts 81,140
Cash payment
A/P for merchandise (including freight ) 53,400
Insurance premiums 940
Salaries 10,700
Other operation expenses 3,000
Drawing by owner 6,000
Total Cash payment 74,040
Other operating information
Cash discounts taken by customers (sales Discounts) 600
sales returned and allowance 1,800
Accounts receivable written off as uncollectable during year 2 300
Cash discounts taken on purchases (purchases discounts) 1,100
Purchases returned and allowance 970
Additional information:
1) No acquisitions or disposals of building or equipment took place during year 2.
2) Depreciation is computed at 2,800 $ for year 2.
3) The direct write – off method is used to recognize doubtful accounts expenses.
Required
Prepare income statement and balance sheet for year 2.
Financial Accounting CPA Incomplete Records

Q3 : Presented below is information related to Tanizaki Inc. Balance per books at

October 31, $41,847.85; receipts $173,523.91; disbursements $166,193.54. Balance per
bank statement November 30, $56,274.20.
The following checks were outstanding at November 30.
1224 $1,635.29
1230 2,468.30
1232 3,625.15
1233 482.17
Included with the November bank statement and not recorded by the company were a
bank debit
memo for $27.40 covering bank charges for the month, a debit memo for $572.13 for a
customer’s check returned and marked NSF, and a credit memo for $1,400 representing
bond interest collected by the bank in the name of Tanizaki Inc. Cash on hand at
November 30 recorded and awaiting deposit amounted to $1,915.40.

Requirements:
(a) Prepare a bank reconciliation (to the correct balance) at November 30, 2003, for
Tanizaki Inc. from the information above.
(b) Prepare any journal entries required to adjust the cash account at November
30. (20 Mark)

Q4: Jackel Industries presents you with the following information

description Date Cost Salvage Life Depreciation Accumulated Dep.
purchased value in method Dep. To For
Year Dec. 31, 2005
2004
Machine Dec. 2, 142500 16000 $ 10 (A) 33350 (B )
A 2003 $
Machine B August 1, ( C ) 21000 5 SL 29000 (D)
2002
Machine C July 1, 75400 23500 8 DB (E) (F)
2001
Machine Dec 1, (g) 219000 69000 5 SYD 70000 (H)
D
In April 1, 2006 Machine B sold in cash for 40000$.
In July 1, 2006 Machine D exchanged for new 1, Machine E its cost 300000 $ and the
com. Paid 140000 $. Machine E estimated useful life 5years no salvage value and
depreciation used the same for Machine D.

Requirements:
1) Complete the table for the year ended December 31, 2005. The company
depreciates all assets using the half-year convention.
2) Record the necessary entries during 2006 including the entry in Dec. 31, 2006. (20
Mark)
Financial Accounting CPA Incomplete Records

Q5: Ali Co. was organized in 2004 to produce a single product. Its production and
sales records for the period 2004 – 2007 are summarized below:
year Units produced sales
Units produce Production cost Units sold Sales Revenue
2004 320,000 units 86,400 $ 200000 units 122,500 $
2005 310,000 130,200 290,000 175,000
2006 270,000 129,600 290,000 203,000
2007 220,000 99,000 200,000 150,000

Required
Calculate the gross profit for each of the four years assuming that inventory balance
are calculated in term of:
A) First in – First Out (FIFO)
B) Last In – First Out (LIFO) (20 Mark)