Question A1 (Week 1: Classification of Assets, Liabilities, Equity, Revenues and Expenses / 10 marks)

Indicate whether each of the following is an asset, liability, equity, revenue or expense item. (10 marks)

1. Notes Payable
2. Depreciation Expense
3. Dividends
4. Service Revenue
5. Accumulated Depreciation - Equipment
6. Interest Expense
7. Retained Earnings
8. Interest Payable
9. Salaries and Wages Expense
10. Supplies

Question A2 (Week 1: Accounting Equation / 10 marks)

The amounts of the assets and liabilities of EFG Ltd. At 31 December 2020, and its revenue and expenses for the year follow. The capital of Mr. Chan, owner was $180,000 at 1 January 2020, and the owner withdrew $40,000 during the year.

Accounts payable $25,000 Supplies $9,000

Accounts receivable 210,000 Supplies expense 12,000

Cash 146,000 Taxes expense 10,000

Fees earned 875,000 Utilities expense 38,000

Other expense 15,000 Salaries expense 525,000

Rental expense 75,000

Required:

Prepare an income statement for the year ended 31 December 2020 and a statement of financial position as of 31 December 2020. (10 marks)

Section B: Answer ALL FOUR Questions (80 marks)

Question B1 (Week 3: Adjusting the Accounts / 20 marks)

On 31 December 2020, the following data were accumulated to assist the accountant in preparing the adjusted entries for HK Realty Consultants Ltd.

1. Fees accrued but unbilled at 31 December are $197,500.

2. The supplies account balance on 31 December is $123,000. The supplies on hand at 31 December are $41,500.

3. Salaries accrued but not paid at 31 December are $27,000

4. The unearned rent account balance at 31 December is $90,000, representing the receipt of an advance payment on 1 December of three months rent from tenants.

5. Depreciation of office equipment is $32,000.

Required:

1. Journalize the adjusting entries required at 31 December 2020.
2. Present the rationale behind adjusting entries.

Question B2 (Week 2: Record Process / 20 marks)

The following account balances are taken from the records of ASDFG Ltd. at 31 December 2020.

	$		$
Account Payable	40,000	Rent Expense	7,000
Account Receivable	50,000	Repair Revenue	83,500
Advertising Expense	5,000	Salaries Expense	30,000
Bank Loan	35,000	Salaries Payable	10,000
Cash	10,000	Supplies	5,000
Share Capital	80,000	Supplies Expense	2,500
Commission Expense	15,000	Truck	80,000
Equipment	35,000	Truck Operation Expense	9,000

Required:

1. Prepare a (1) trial balance, (2) income statement, (3) retained earnings statement and the (4) statement of financial position for the month ended 31 December 2020.

Question B3 (Week 5: Inventory Costing / 20 marks)

Consider the following:

Beginning inventory: 800 units @ $24 per unit.

Quarter 1: 1200 units purchased, @$25 per unit.

Quarter 2: 900 units purchased, @$30 per unit.

Quarter 3: 1500 units purchased, @$29 per unit.

Quarter 4: 1200 units purchased, @$32 per unit.

3,800 units sold over these 4 quarters for an average price of $40 per unit.

Corporate tax rate is 16.5%.

Required:

1. What are the values of (1) beginning inventory, (2) purchase, (3) COGS, (4) ending inventory, (5) sales under the FIFO method, for this 4-quarter period?
2. What are the values of (1) average cost, (2) COGS, (3) ending inventory, (4) earnings before tax and (5) earnings, under the average cost method, for this 4-quarter period?

Question B4 (Week 4: The Concept of Depreciation / 20 marks)

A company has just purchased a machine for $30,000,000. The machine is expected to last for 5 years with a salvage value of $5,000,000.

Required:

1. What would be the annual values of (i) depreciation rate, (ii) depreciation expense, (iii) accumulated depreciation and (iv) net book value over the 5-year period, under the straight line depreciation method?

2. What would be the annual values of (i) depreciation rate, (ii) depreciation expense, (iii) accumulated depreciation and (iv) net book value over the 5-year period, under the double-declining balance depreciation method?

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