Part I (15 marks) Masters Company's bank statement showed a balance of $48,000 as at 30 November 2021. The book showed a cash balance 544,000 as at 30 November 2021. As an accountant, you need to prepare the bank reconciliation at 30th November, using the following information: 1. The company's new accounting clerk erroneously recorded 87,200 as salary expenses paid to the part-time tea lady, but the check amount should be $7,100. 2. A check $400 issued by a customer, Small Ltd., deposited previously was debited by bank because of non-sufficient fund. 3. The company had a total check deposit of 584,000 during November, but the bank showed only deposits of S46,000. No deposit-in-transit was carried forward from last month. 4. Hifi Lid. directly deposited $27.900 to the company's bank account to settle a note receivable (Ignore interest). 5. Examination of the paid checks revealed that two checks amounting to $15,200 had not been paid by the bank. 6. Service charge of $800 was debited by the bank. Required: (a) Prepare a bank reconciliation statement as at 30 November 2021. Show your workings (10 marks) (b) Prepare the journal entries that should be made in the book of Masters Company as a result of the above bank reconciliation. (6 marks) Part II (18 marks) Big Ltd. used the statement of financial position approach to estimate uncollectible account receivable. On 1 January 2021, The Allowance for Impairment showed a credit balance of $15,000. During 2021, S120,000 of specific accounts receivable were written off as uncollectible. Of these accounts written off, receivables totaling $20,000 were subsequently collected. The aging schedule of the accounts receivable as at 31 December was as follows: Days past due Accounts Estimated receivable uncollectible percentage Current S 550.000 1% 1 - 60 days 250.000 61 - 120 days 6% Over 120 days 20.000 8% $900.000 Required: (a) Prepare the journal entries to record the amounts written off during 2021. (4 marks) (b) Prepare the journal entries to record the $20,000 in accounts receivable that were subsequently collected. (8 marks) 80.000 (c) O Calculate the required balance of Allowance of impairment at 31 December 2021(show your workings). (2 marks) (ii) Calculate the amount of the Impairment Loss of Receivable to be adjusted for the year (show your workings). (2 marks) (d) Prepare the adjusting entries to bring the Allowance for Impairment to the proper amount on 31 December 2021. (2 marks) Question 2 (30 marks) Part I (10 marks) Each of the following five lines represents a separate set of information in a periodic inventory system and some elements of an income statement. Compute the missing amounts. Sales Sales Net Beginning Purchases Ending Cost of Gross Return Sales Inventory Inventory Goods Profit Sold 215,800 (1) 210,000 69,000 (2) 55,500 147,000 63.000 109,200 3.000 (3) 31.200 (4) 30,600 79.200 27,000 126,700 6,700 120,000 18,000 68,000 (5) 66.000 (6) d (7) 77.000 480,000 152,000 208.000 70,400 (8) 190,400 459,000 54.000 405.000 (9) 225.000 67,500 (10) 117.000 a b. c. e. Part II (20 marks) Funny Company uses perpetual inventory method. Prepare the journal entries for the following transactions: Dec 1Purchased goods from Sisi Company for $18,000 on account. 3 Returned $800 of the goods to Sisi Company. Sold goods to Handy Company for $21,500 with gross profit rate of 20%. The payment will be made within 30 days. 31 Funny conducted physical count of inventory and revealed $750,000 inventory was on hand while the inventory account balance was $772,000. 17 Question 3 (37 marks) Part I (32 marks) (a) Strong Company bought a piece of machinery on 1 March 2021 at a cost of $124,000 with a residual value of $4.000. The estimated useful life of this machinery was 10 years. The estimated operation output was 10,000 hours. Compute the depreciation expense of the machinery at the year-end on 31 December for 2021 and 2022 by using the methods shown below (show your workings): 3 (i) Straight-line (with depreciation calculated to the nearest whole month), (ii) Unit-of-output (Output: 1,000 hours in 2021; 3,000 hours in 2022). Depreciation (i) Straight-line Method (ii) Units-of-output expense Method 2021 2022 (8 marks) (b) Strong Company also purchased an equipment at a cost of $200,000 at the beginning of the year. The estimated useful life of the equipment was 4 years and had a residual value $9,000. If Strong uses double-declining-balance deprecation method, prepare a detailed schedule for depreciation, accumulated depreciation, and book value for all the years during its useful life. Use the following table to show your answers (show your workings). Year Depreciation Accumulated Book value at Expense for the year depreciation at year end year end 1 2 3 4 (12 marks) (e) On 30th November 2023, Strong Company decided to sell the above machinery in (a) for $80,000 cash. Assuming that the company uses straight-line depreciation method in (a)(i) and adjusts the depreciation expenses annually, prepare the following journal entries: (i) to adjust the depreciation expense for 2023; (4 marks) (ii) to record the disposal on 30 November 2023. (8 marks) Part II (5 marks) (a) The following expenditure was incurred on the Van purchased a few years ago. Prepare the journal entries for the following transactions: (i) Installed a new engine to recondition the van thoroughly for cash $60,000; (ii) Conducted routine repairing on the van for cash $1,000 (4 marks) (b) If a capital expenditure is erroneously recorded as a revenue expenditure, will the profit of the current year be overstated, understated or unaffected? (1 mark)