1. Assume that at January 1, 2011, the first day of the new fiscal period, the city council of Barb City approves the operating budget for the general fund, providing for $800,000 in revenue and $750,000 in expenditures. Approval of the budget provides the legal authority to levy the local property taxes and to appropriate resources for the expenditures. Record the transaction in journal.

(3 MARKS)

2. Discuss in detail the following areas covered under partnership agreement. (3 Marks)

• Manner of sharing profits.
• Limitations on withdrawals.
• Rights of partners.
• Conflicts of interest.

3. On Jan, 1 2014, Peter Corp. (a U.S. based company) formed a new subsidiary in Saudi Arabia, Saeed Inc., with an initial investment of 30,000 SAR. (4 Marks)

Assume Saeed Inc. Purchases inventory evenly throughout 2014.

The ending inventory is purchased Nov. 30, 2014.

Uses straight-line depreciation on fixed assets.

Declares and pays dividends on Nov. 30, 2014.

Purchased the fixed assets on April 1, 2014.

Uses SAR as the functional currency.

Exchange Rates are given:

Jan 1, 2014 0.260

April 1, 2014 0.255

Nov. 30, 2014 0.240

Dec. 31, 2014 0.238

REQUIRED

Prepare a schedule to Saeeds financial statements on Dec. 31, 2014 to U.S. dollars.