Q-1. (Chapter-3): A3-3 Income Statement Format:

The following items were taken from the adjusted trial balance of the Bremeur Corporation on 31 December 205. Assume an average 20% income tax on all items (including the divestiture loss). The accounting period ends 31 December. All amounts given are pretax and are subject to the same income tax rate. Bremeur had 30,000 shares outstanding at the beginning of the year. On 31 August 205, an additional 9,000 shares were issued; at the end of 205, 39,000 shares were outstanding.

Required: (14 Marks) Prepare a multi-step Statement of Comprehensive Income, in good form, on functional basis.

Q-2. (Chapter 4): A4-12 Error Correction

In May 205, the newly appointed controller of Butch Baking Corporation conducted a thorough review of past accounting, particularly of transactions that exceeded the company's normal level of materiality. As a result of his review, he instructed the company's chief accountant to correct the error below:

In 202, the company made extensive improvements to the baking process and installed a substantial amount of new equipment. The entire cost of the process improvements and equipment was accidentally charged to income as restructuring expense in 202. However, the equipment should have been capitalized and added to the factory equipment account. The cost of the equipment was $1,200,000. Butch depreciates its factory equipment on the straight-line basis over 10 years. A full year's depreciation is charged in the year that equipment is acquired. The companys tax rate is 30%. Additional information: The Companys net income before taxes was $3,500,000 for 20X2 and $4,400,000 for 20X3.

Required: (8 Marks) Calculate the impact on Net Income (after taxes) for years, 20X2 and 20X3.

Q-3. (Chapter-7) A7-4: Accounts ReceivableAllowances:

At 31 December 20X8, Small Ltd. reported gross accounts receivable of $2,481,800. Investigation showed the following:

The credit balance in the allowance for doubtful accounts was $182,400 after write-offs for the year but before any bad debt adjustment. Bad debt expense is based on a percentage of receivables. Based on the latest available facts, $280,000 will not be collected due to collection issues.

Terms of 1/10, n/30 were granted to all customers. Accounts receivable were recorded gross, and the discounts taken were recorded when taken by the customers in a discounts account, reported contra to the sales account. Estimated discounts inherent in the closing accounts receivable balance were $30,600. The allowance for sales discounts account was established at $29,800 last year and has not been adjusted since.

Required: (8 Marks)

Prepare year-end adjusting entries with respect to accounts receivable.

Show how the net accounts receivable would appear on the statement of financial position on 31 December 20X8.