Financial Accounting2

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Assignment Question(s): Total Marks 10 Chapter 7 to 10

Q1. Discuss with your own examples the two methods of accounting for account receivableswith cash discounts and the two methods for estimating bad debts. (2 Marks)

(Note: Numerical Examples must include Journal entry)

Answer

Q2. X Company has the following receivables classified into individually significant and all other receivables.

Individually significant

P Company

Q Company

R Company

S Company

All other receivables

$ 65,000

95,000

75,000

35,000

270,000

425,000

Total receivables.

695,000

X company determines that P’s receivable is impaired by $20,000, and S’s receivable is totally impaired. Both Q’s and R’s receivables are not considered impaired. X company also determines that a composite rate of 2% is appropriate to measure impairment on all other receivables.

Required: Calculate the total impairment on accounts Receivable (1 Mark)

Answer:

Q3. Rex Company’s record of transactions for the month of September was as follows.

Purchase

Sales

Date

Quantity

Unit Price

Date

Units

Sep 1

(Balance on hand) 100

$5.00

Sep 5

300

Sep 4

400

5.10

Sep 12

200

Sep 11

300

5.30

Sep 27

800

Sep 18

200

5.35

Sep 28

150

Sep 26

600

5.60

Sep 30

200

5.80

Total

1,800

1,450

Total units (ending inventory) 350

Instructions: (2 Marks)

Compute the ending inventory at September 30 on each of the following on periodic bases.

1. FIFO

2. LIFO

3. WA

Answer:

Q4. Explain the concept of LCNRV and its applicability to Agricultural Inventory and

Commodity Broker-Traders (1 Mark)

Answer:

Q5. Give numerical examples for Gross profit and retail Methods of Estimating ending Inventory. (2 Marks)

Q6. ABC Corporation borrowed SAR 150,000 at 10% interest from NCB Bank on Jan. 1, 2020, for specific purposes of constructing special-purpose equipment to be used in its operations. Construction on the equipment began on Jan. 1, 2020, and other general debt existing on Jan. 1, 2020 was:

SAR 200,000, 12%, 10-year bonds payable

SAR 100,000, 11%, 5-year note payable

The weighted-average accumulated expenditures was SAR 250,000.

Compute the Actual and Avoidable Interest and Pass journal entry for the appropriate interest to be capitalized. (2 Marks)

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