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THE UNIVERSITY OF THE WEST INDIES
□ Supplemental/Summer School □
Examinations of December □ /April/May □ /July □ 2011/2012
Originating Campus:
Cave Hill
□
Mona
□
St
...
Paper No:
Materials required:
Answer booklet:
Calculator:
(Where applicable)
Multiple Choice answer sheets:
Programmable
□
□
numerical
□
Normal
Non Programmable
□
□
alphabetical
□ 1-20 □ 1-100 □
Special
Not required
□
Auxiliary/Other material(s) – Please specify:
Candidates are permitted to bring the following items to their desks: Pencil or pen, Ruler, ID card, Exam card
INSTRUCTIONS TO CANDIDATES: This paper has 10 pages and 20 questions
...
Section A:
Multiple Choice Questions - Answer ALL questions
...
All accounts should be prepared in accordance with International Financial
Reporting Standards (IFRSs)
Show ALL workings
...
Completed forms should be handed to the
Senior/Assistant Registrar (Examinations)
...
…………………………
...
University Examiner (where applicable)
………………………………
...
External Examiner (where applicable)
Date: 2012/03/23
Date: 20…
...
(25 marks)
Answer ALL the questions in this section
...
1
...
Which of the following items used to reconcile cash does not require an
adjusting journal entry?
(A) Bank charges
(B) Interest earned
(C) Notes collected by the bank
(D) Deposits in transit
3
...
These dividends should be reported:
(A) in a note to the financial statements
(B) as a reduction in stockholders’ equity
(C) as a current liability
(D) as a noncurrent liability
4
...
(1 mark)
The two basic sources of capital for a corporation are:
(A) paid-in capital and retained earnings
(B) assets and equity
(C) preferred and common stock
(D) retained earnings and dividends
6
...
(B) A debit to Cost of Goods Sold and a credit to Purchases at the cost of the
inventory
...
(D) Both A and C are necessary entries
...
Completed forms should be handed to the
Senior/Assistant Registrar (Examinations)
...
…………………………
...
University Examiner (where applicable)
………………………………
...
External Examiner (where applicable)
Date: 2012/03/23
Date: 20…
...
When a specific customer’s account is written off by a company using the
allowance method, the effect on net income and the net realizable value of
the accounts receivable is:
Net Income
(A)
(B)
(C)
(D)
None
Decrease
Increase
Decrease
Net Realizable Value of
Accounts Receivable
None
Decrease
Increase
None
(2 mark)
8
...
Dickens Company income statement for the year ended December 31, 2011,
reported net income of $360,000
...
(2 marks)
Century Company sold an old copy machine for $32,000
...
the entry to record the sale is:
(A) Cash
$32,000
Accumulated Depreciation – Office Equipment
65,000
Office Equipment
$90,000
Gain on Sale of Equipment
7,000
(B) Cash
$32,000
Loss on Sale of Office Equipment
58,000
Office Equipment
$90,000
(C) Cash
$32,000
Accumulated Depreciation – Office Equipment
65,000
Office Equipment
$97,000
(3 marks)
(D) None of the above
Semester 2 2011/2012
The University of the West Indies
Course Code ACCT 1005
2012/03/23
DO NOT WRITE OR TYPE ON THE BACK OF THIS SHEET: USE ONE SIDE ONLY INSTRUCTIONS: Each page must be signed by the
First and Second Examiners, and where applicable the University and External Examiners
...
Where applicable, the EXTERNAL EXAMINER is required to sign the question paper and return it
with comments, if any, (on a separate sheet), to the Senior/Assistant Registrar (Examinations)
...
First Examiner
……………………………………………
...
Second Examiner
……
...
/……
4
11
...
The journal entry for the dividend declaration would be
(A) A debit to Retained Earnings for $10,000 and a credit to Cash Dividends
Payable for $10,000
...
(C) A debit to Retained Earnings for $8,000 and a credit to Cash for $8,000
...
The February 28 bank statement of James Company is showing a balance of
$18,025
...
On February 28 there is a $3,125 deposit is in
transit and outstanding cheques totalling $2,875
...
(2 marks)
Chewing Corporation has 2,000 shares of 6%, $100 par preferred stock, and
20,000 shares of common stock, $20 par outstanding
...
On December 31, 2011, a total dividend of
$200,000 was declared
...
Grubbs Company acquired Land and Buildings for $1,350,000
...
The
debit to the Building Account is
(A) $675,000
(B) $513,000
(C) $837,000
(D) $775,000
(2 marks)
15
...
Completed forms should be handed to the
Senior/Assistant Registrar (Examinations)
...
…………………………
...
University Examiner (where applicable)
………………………………
...
External Examiner (where applicable)
Date: 2012/03/23
Date: 20…
...
QUESTION 16
COMPULSORY - (35 marks)
The following trial balance was extracted from the books of Trask Corporation at
June 30, the end of the company’s fiscal year
...
Trask Corporation
Trial Balance as at June 30, 2011
Dr $
Cr $
Cash
160,000
Accounts Receivable
140,000
Allowance for Bad-Debts
8,000
Merchandise Inventory
192,000
Store Supplies
80,000
Prepaid Insurance
54,000
Furniture & Fixtures
800,000
Accumulated Depreciation: Furniture & Fixtures
285,000
Computer Equipment
450,000
Accumulated Depreciation: Computer Equipment
Accounts Payable
267,000
Wages Payable
Interest Payable
Unearned Sales Revenue
89,000
Notes Payable, Long-Term
350,000
Conrad Fuller, Capital
754,000
Conrad Fuller, Withdrawals
160,000
Sales Revenue Earned
985,000
Sales Discount
5,000
Sales Returns & Allowances
12,000
Cost of Goods Sold
390,000
Wages Expense
171,000
Insurance Expense
Utilities Expense
94,000
Depreciation Expense – Furniture & Fixtures
Depreciation Expense – Equipment
Store Supplies Expense
Bad-Debt Expense
Interest Expense
30,000
________
Total
2,738,000 2,738,000
The following additional information is available at June 30, 2011:
(i)
Store supplies on hand at June 30, 2011 amounted to $30,000
(ii)
Insurance of $54,000 was paid on June 1, 2011 for the 3-months to August
31, 2011
...
(iii)
Continued
...
Completed forms should be handed to the
Senior/Assistant Registrar (Examinations)
...
…………………………
...
University Examiner (where applicable)
………………………………
...
External Examiner (where applicable)
Date: 2012/03/23
Date: 20…
...
(iv)
The computer equipment was acquired on October 1, 2010 and is being
depreciated over 5 years on the double-declining method of depreciation,
down to a residue of $50,000
...
(vi)
Accrued interest expense, $8,000
(vii)
A physical count of inventory at June 30, 2011, reveals $188,000 worth of
inventory on hand
...
(ix)
The aging of the Accounts Receivable schedule at June 30th, 2011 indicated
that the estimated uncollectible on account receivable is $14,500
...
Required:
a)
Identify the inventory system used by the business
...
(8 marks)
c)
Prepare Trask’s multiple-step income statement for the year ended June 30,
2011
...
(3 marks)
e)
Prepare Trask’s classified balance sheet, in report format, at June 30, 2011
(7 marks)
f)
Calculate the following ratios for the year ended June 30, 2011
(i) Current Ratio
(ii) Debt Ratio
iii) Inventory Turnover (Inventory on hand at June 30, 2010 was $160,000)
(5 marks)
With the aid of journal entries, briefly explain the steps necessary in recording
collections on an account which was previously written-off as bad under the
allowance method
...
Completed forms should be handed to the
Senior/Assistant Registrar (Examinations)
...
…………………………
...
University Examiner (where applicable)
………………………………
...
External Examiner (where applicable)
Date: 2012/03/23
Date: 20…
...
The
company paid cash of $15,000 and signed a one-year, 9% note payable for
$40,000
...
The new machine will be depreciated over 5 years using the sum-of-the-years-digits
method, down to a residue of $8,000
Required:
Given that the financial year ends December 31:
i) show the journal entries necessary to record the transaction on September
30, 2010
ii) record the depreciation expense for the new machine at December 31, 2010
(8 marks)
b) The accounts of Minerals Plus, Inc
...
During 2006 & 2007,
the company completed the following transactions:
2006
January 1
Purchased Equipment for $400,000 cash
...
The building is
expected to be used for 20 years, and being depreciated on the
double-declining balance method
...
December 31
Recorded depreciation expense for the equipment
December 31
Recorded depreciation on the building
2007
June 30
Sold the equipment for $350,000 cash
December 31
Recorded depreciation on the building
Required:
Record the journal entries for the transactions in Minerals Plus, Inc
...
(12 marks)
Semester 2 2011/2012
The University of the West Indies
Course Code ACCT 1005
2012/03/23
DO NOT WRITE OR TYPE ON THE BACK OF THIS SHEET: USE ONE SIDE ONLY INSTRUCTIONS: Each page must be signed by the
First and Second Examiners, and where applicable the University and External Examiners
...
Where applicable, the EXTERNAL EXAMINER is required to sign the question paper and return it
with comments, if any, (on a separate sheet), to the Senior/Assistant Registrar (Examinations)
...
First Examiner
……………………………………………
...
Second Examiner
……
...
/……
8
QUESTION 18
(20 MARKS)
At January 1, 2007, the accounts of Brownie Company include the following:
Accounts Receivable ………………………………………………………………
...
Blake on account for $600
...
June 29
Wrote off the M
...
Blake, along with a letter stating his
apology for paying late
...
December 28
Made a compound entry to write off the following accounts as
uncollectible: B
...
Myers, $1,300
...
1%
1%
10%
30%
Required:
i)
ii)
iii)
iv)
v)
Record the transactions in the general journal, clearly showing all workings,
including the aging schedule used to estimate the amount of Bad-Debt
Expense at December 31
...
Keep a running balance
...
(3 marks)
Semester 2 2011/2012
The University of the West Indies
Course Code ACCT 1005
2012/03/23
DO NOT WRITE OR TYPE ON THE BACK OF THIS SHEET: USE ONE SIDE ONLY INSTRUCTIONS: Each page must be signed by the
First and Second Examiners, and where applicable the University and External Examiners
...
Where applicable, the EXTERNAL EXAMINER is required to sign the question paper and return it
with comments, if any, (on a separate sheet), to the Senior/Assistant Registrar (Examinations)
...
First Examiner
……………………………………………
...
Second Examiner
……
...
/……
9
QUESTION 19
(20 MARKS)
Sage Corporation accountants have assembled the following data for the year ended
December 31, 2009:
December 31,
2009 2008
Current Accounts:
Current Assets:
Cash & Cash equivalents………
...
Inventories…………………………………………
...
Income tax payable………………………………
...
Include an accompanying schedule of non-cash investing and financing activities
...
What impact would a declaration of a stock
dividend have on the retained earnings and the total common shareholders’ equity
of an entity?
(6 marks)
Semester 2 2011/2012
The University of the West Indies
Course Code ACCT 1005
2012/03/23
DO NOT WRITE OR TYPE ON THE BACK OF THIS SHEET: USE ONE SIDE ONLY INSTRUCTIONS: Each page must be signed by the
First and Second Examiners, and where applicable the University and External Examiners
...
Where applicable, the EXTERNAL EXAMINER is required to sign the question paper and return it
with comments, if any, (on a separate sheet), to the Senior/Assistant Registrar (Examinations)
...
First Examiner
……………………………………………
...
Second Examiner
……
...
/……
10
QUESTION 20
(20 MARKS)
Street Cellular Company recently received its bank statement for the month of
February, 2012 from Mona Commercial Bank
...
A comparison
of the bank statement with the cash account revealed the following:
i)
The ledger account for Cash showed a balance at February 28 of $29,250
ii)
The February bank statement showed a closing balance of $54,600
...
iv)
There was an EFT deposit of $18,000 on the bank statement for the
monthly rent due from a tenant
...
vi)
During the evening of February 28, a deposit of $38,000 was placed in the
night deposit box at the bank after closing hours; this is not shown on the
bank statement
...
The cheque was written to a vendor to pay off an
account payable
...
Thomas for $2,000 that was incorrectly charged to
Street Cellular Company’s account by the bank
...
Blair, a customer of Street Cellular Company
...
” It had been included in the deposit of February 25 but had been
charged back against the company’s account on February 28
...
(9 marks)
Prepare the adjusting journal entries that would be necessary after preparing
the bank reconciliation statement for Street Cellular Company at February 28,
2012
...
(6 marks)
END OF QUESTION PAPER
Semester 2 2011/2012
The University of the West Indies
Course Code ACCT 1005
2012/03/23
DO NOT WRITE OR TYPE ON THE BACK OF THIS SHEET: USE ONE SIDE ONLY INSTRUCTIONS: Each page must be signed by the
First and Second Examiners, and where applicable the University and External Examiners
...
Where applicable, the EXTERNAL EXAMINER is required to sign the question paper and return it
with comments, if any, (on a separate sheet), to the Senior/Assistant Registrar (Examinations)
...
First Examiner
……………………………………………
...
Second Examiner
……
...
/……