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Corporate Accounting Assignment -

Question 1 - Dr. Kelvin opened a dental clinic on August 1, 2018. The business transactions for August are shown below:

August 1

Dr. Kelvin invested $280,000 cash in the business in exchange for 1,000 shares of capital stock.

August 4

Land and a building were purchased for $400,000.  Of this amount, $60,000 applied to the land and $340,000 to the building.  A cash payment of $80,000 was made at the time of the purchase, and a note payable was issued for the remaining balance.

August 9

Medical instruments were purchased for $75,000 cash.

August 16

Office fixtures and equipment were purchased for $25,000.  Dr. Kelvin paid $10,000 at the time of purchase and agreed to pay the entire remaining balance in 15 days.

August 21

Office supplies expected to last several months were purchased for $4,200 cash.

August 24

Dr. Kelvin billed patients $13,000 for services rendered.  Of this amount, $1,000 was received in cash, and $12,000 was billed on account (due in 30 days)

August 27

A $450 invoice was received for several newspaper advertisements placed in August.  The entire amount is due on September 8.

August 28

Received a $500 payment on the $12,000 account receivable recorded August 24.

August 31

Paid employees $2,200 for salaries earned in August.

A partial list of account titles used by Dr. Kelvin includes

Cash

Accounts receivable

Office supplies

Medical instruments

Office fixtures and equipment

Land

Building

Notes payable

Accounts payable

Capital stock

Service revenue

Advertising expenses

Salary expenses

Required

a. Prepare journal entries for each transaction up to 31 August 2018.

b. Post each transaction to the appropriate ledger accounts (use T account format).

c. Prepare trial balance dated August 31, 2018.

Question 2 - The following balances have been extracted from the ledgers of CGC Ltd on 30 September 2018


$

$

Trade payable


27,900

Sales Revenue


240,000

Land at cost

54,000


Building at cost

114,000


Furniture & fittings at cost

66,000


Bank overdraft


18,000

Provision for depreciation



Buildings


18,000

Furniture & fittings


30,000

Bank interest received


5,292

Retained earnings at 1.10.2017


6,000

Allowance for doubtful accounts


2,448

Cash in hand

696


Inventory 1.10.2017

42,744


Rates

6,372


Wages and salaries

24,000


Insurance

5,688


Sales return

1,116


Distribution expenses

1,308


Trade receivable

37,920


Purchases

131,568


Debenture interests expenses

1,200


Bad debts

2,028


5% debenture 2023


48,000

ordinary shares capital


60,000

Revaluation reserves

_______

33,000


488,640

488,640

Other relevant information

1. Closing inventory on 30.9.2018 was valued at $46,638. Periodic inventory system was used.

2. Insurance paid in advance was $300, and wages accrued was $840.

3. Depreciation is to be provided at 10% on cost of buildings, and at 20% on carrying amount of furniture and fittings.

4. The land was revalued to 154,000.

5. Debenture interest expense outstanding for the year is $1,200.

6. The profit tax charge for the year is $20,000 which had not been provided in the books.

7. Bad debt expenses, depreciation, insurance, rates, wages and salaries are classified as administrative expenses.

Required - Prepare the Statement profit or loss and Other Comprehensive Income and Statement of Financial Position for the year ended September 30, 2018 based on the format specified in HKAS 1 (Revised).

Question 3 - Discuss the following statement in accordance with the relevant generally accepted accounting principle. Write not more than 500 words.

'Experienced and loyal employees have been called the most value asset of a business. However, accountants leave them off the asset in the Statement of Financial Position.'

Question 4 - On January 1, 2016, Sliver Limited purchased a piece of equipment for production of goods. The purchase price of the equipment was $670,000. Sliver Limited paid cash on the date of purchase. Sliver Limited estimated that the equipment has an expected useful life of 4 years with a residual value of $30,000 on December 31, 2019. On February 15, 2018, Silver Limited disposed of equipment for cash amount of $358,000.

Silver Limited adopts revaluation model for measuring equipment. For items with revaluation, it is Sliver Limited's policy to eliminate accumulated depreciation against gross carrying amount of asset in a revaluation.

Silver Limited usually depreciates equipment of similar type on a straight line basis. Full year of depreciation is to be charged in the year of purchase and none to be charged in the year of disposal.

Silver Limited revalued the equipment twice on December 31, 2016 and December 31, 2017 and the revalued amounts were $528,000 and $370,000 respectively.

Required - In accordance with the requirement of HKAS 16 (IAS 16) 'Property, Plant and Equipment ', prepare all journal entries that Sliver Limited should make relating to the equipment:

a. For the year ended December 31, 2016 and 2017.

b. For the disposal of the equipment on February 15, 2018.

Managerial Accounting, Accounting

  • Category:- Managerial Accounting
  • Reference No.:- M93121558

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