Q. 2

a. ABC Public Limited purchased plant and equipment through a down payment of cash of $ 2 million and signing a bond payable of $ 8 million.

i. What will be the effect of this transaction on the following? (Note: Write I for Increase; D for Decrease and NE for No Effect in the following blanks) (5)

Income Statement			Balance Sheet			Cash Flow Statement
Revenue	Expenses	Net Income	Assets	Liabilities	Owners Equity	*ICFs	*FCFs	*OCFs
-----------	-----------	----------	---------	-----------	-----------	---------	---------	---------
*ICFs=Investing Cash Flows; FCFs=Financing Cash Flows & OCFs=Operating Cash Flows
ii. Prepare journal entry of the above transaction: (5) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

b. ABC Public Limited uses perpetual inventory system and sold goods costing $ 20 million for $ 30 million and received $ 22 million cash while rest of the sales is on account.

i. What will be the effect of this transaction on the following? (Note: Write I for Increase; D for Decrease and NE for No Effect in the following blanks) (5)

Income Statement			Balance Sheet			Cash Flow Statement
Revenue	Expenses	Net Income	Assets	Liabilities	Owners Equity	*ICFs	*FCFs	*OCFs
-----------	-----------	----------	---------	-----------	-----------	---------	---------	---------
*ICFs=Investing Cash Flows; FCFs=Financing Cash Flows & OCFs=Operating Cash Flows
ii. Prepare journal entry of the above transaction: (5) ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------