1. Bank Reconciliation The following information were obtained from the accounting records of Khalid Company at the end of the month, March 31, 2021. The bank statement from Bank Muscat showed a balance of OMR 3,000. The company's checkbook ledger showed a balance of OMR 1,575. Outstanding checks OMR 2,000. NSF checks OMR 50. Deposits in transit OMR 500, There was an error on check #101 which was written for OMR 400, but Khalid incorrectly recorded it as OMR 40. Bank service charge OMR 15. Electronic fund transfer from credit customer collected by bank OMR 300. Interest revenue OMR 50 Required: a. Prepare a bank reconciliation statement. (2 Marks) b. What is the purpose of prepare bank reconciliation? (1 Mark) 2. Petty Cash Fund January 1 - Khalid Company established a petty cash fund of OMR 350 by issuing a check. January 31 - Replenished the fund. It had cash on hand OMR 20 and receipt as follows: Meals and snacks OMR 25 Office supplies OMR 220 Transportation OMR 50 Gas and oil OMR 30 Required: a. Record the journal entries on January 1 and January 31(1 Mark) b. What is petty cash fund and what purpose does it serve? (1 Mark) Part 2: Accounting for Receivables (5 Marks) 1. Methods of Estimating Bad Debts Khalid Company had the following information as of December 31, 2020. Credit Sales OMR 1,250,000 Accounts Receivable OMR 300,000 Allowance for doubtful accounts credit balance OMR 5,000 Required: a. What journal entry is required under each of the following assumption? 1. An estimate of 2.5% of credit sales is uncollectible. ii. An estimate of 10% of accounts receivable is uncollectible. b. What is the net realizable value of accounts receivable for part i and ii. 2. Aging of Receivables Khalid Company ages its accounts receivable and estimates uncollectible accounts as follows: Age A/R Balance Uncollectible Not due 300,000 2.00% 1-30 days past due 200,000 5.00% 31-60 days past due 150,000 10.00% 61-90 days past due 80,000 20.00% Over 90 days past due 50,000 30.00% 780,000 Required: a. Record the journal entry to estimate bad debts at year-end assuming an allowance balance of OMR 5,000 credit b. Record the journal entry the next year when customer A goes bankrupt and Khalid Company write-off OMR 10,000 receivable related to customer A. c. Record the journal entry when Khalid Company collected OMR 5,000 which was previously written-off accounts of customer A. 3. Notes Receivable (use 365 days) Oct. 10 Khalid Company sold goods on account to customer Faisal Co. OMR8,000 terms 2/10, n/30 Nov. 9 Customer Faisal Co. issued a 120-day 10% note of OMR 8,000 in settlement of its accounts. Required: a. Prepare the journal entry on Oct. 10 and Nov.9 b. Prepare the adjusting journal entry on December 31. c. What is the maturity date of the Note? Prepare journal entry on the maturity date when the note was paid in full. Problem 3 Accounting for Inventories (5 Marks) Khalid Company had the following transactions for the month of June. The company uses First in First Out (FIFO) inventory cost flow assumption Date Transaction Units Per Unit Total 1-Jun Beginning Inventory 15 2.00 30.00 5-Jun Purchase 4.00 60.00 10-Jun Sale 25 6.00 150.00 15-Jun Purchase 20 5.00 100.00 20-Jun Purchase 6.00 270.00 25-Jun 8.00 480.00 15 45 60 Sale Required: a. Prepare journal entries using perpetual inventory system. (1 Mark) b. Prepare journal entries using periodic inventory system. (1 Mark) c. What is cost of goods sold and cost of ending inventory using FIFO. (1 Mark) d. What is the difference between perpetual and periodic inventory system? Provide examples of companies that use FIFO and explain why. (2 Marks)
