Question No. 1 (6 Marks)

Prepare bank reconciliation for Norfleet Farm at July 31. The cash transaction and cash balances of Norfleet Farm for July were as follow:

1. The ledger account for cash showed a balance at July 31 of $16,766.95.

2. The July bank statement showed a closing balance of $18,928.12.

3. The cash received on July 31 amounted to $4,017.15. It was left at bank in the night depository chute after banking hours on July 31 and was therefore not recorded by the bank on July statement.

4. Also included with the July bank statement was a debit memorandum from the bank for $7.65 representing service charges for July.

5. A credit memorandum enclosed with the July bank statement indicated that a non-interest bearing note received for $4,545 from Rene Manes, left with the bank for collection, had been collected and the proceeds credited to the account of Norfleet Farm.

6. Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no.821 for $835.02, issued July 15 in payment for office equipment, and had been erroneously entered in Norfleet record as $853.02.

7. Examination of the paid checks also revealed that three checks, all issued in July, had not yet been paid by the bank: no 811 for $861.12; no. 814 for $640.80; no. 823 for $301.05.

8. Included with the July bank statement was a $180 check drawn by Howard Williams, a customer of Norfleet Farm. This check was marked NSF. It had been included in the deposit of July 27 but had been charged back against the company?s account on July 31.

Question No. 2 (4 Marks)

New machinery was purchased by Hydro Tech at a list price of$45,000; the credit terms were 2/10, n/30. Payment of the invoice was made within the discount period. The payment includes 6% sales tax on the net price. HydroTech also paid transportation charges $610 on the new machinery as well as $760 for installation of the machinery in appropriate locations. During the uploading and installation work, some of the machines fell from a forklift and were damaged. Repair of the damaged parts cost $2,170. After the machinery had been in use for 3 months, it was thoroughly cleaned and lubricated at a cost of $260. Prepare a list of items which should be capitalized by a debit to the machinery account and state the total cost of the new machinery.

Question No. 3 (5 Marks)

Herbor Company uses a periodic inventory system. The company?s records show the beginning inventory of product no. T12 on January 1 and the purchase of this item during the current year to be as follows:

Jan. 01 beginning inventory 900 units @ $10.00 $9,000

Feb 23 Purchase 1,200 units @ $11.00 13,200

Apr. 20 Purchase 3,000 units @ $11.20 33,600

May. 4 Purchase 4000 units @ $11.60 46,400

Nov. 30 Purchase 900 units @ $13.00 11,700

Instructions:

A physical count indicates 1,500 units in inventory at year-end.

Determine the cost of inventory based upon average cost method of inventory valuation.

MGT-230 ACCOUNTING II Sessional I Total Marks 15 Question No. 1 (6 Marks) Prepare bank reconciliation for Norfleet Farm at July 31. The cash transaction and cash balances of Norfleet Farm for July were as follow: 1. The ledger account for cash showed a balance at July 31 of $16,766.95. 2. The July bank statement showed a closing balance of $18,928.12. 3. The cash received on July 31 amounted to $4,017.15. It was left at bank in the night depository chute after banking hours on July 31 and was therefore not recorded by the bank on July statement. 4. Also included with the July bank statement was a debit memorandum from the bank for $7.65 representing service charges for July. 5. A credit memorandum enclosed with the July bank statement indicated that a non-interest bearing note received for $4,545 from Rene Manes, left with the bank for collection, had been collected and the proceeds credited to the account of Norfleet Farm. 6. Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no.821 for $835.02, issued July 15 in payment for office equipment, and had been erroneously entered in Norfleet record as $853.02. 7. Examination of the paid checks also revealed that three checks, all issued in July, had not yet been paid by the bank: no 811 for $861.12; no. 814 for $640.80; no. 823 for $301.05. 8. Included with the July bank statement was a $180 check drawn by Howard Williams, a customer of Norfleet Farm. This check was marked NSF. It had been included in the deposit of July 27 but had been charged back against the company's account on July 31. Question No. 2 (4 Marks) New machinery was purchased by Hydro Tech at a list price of$45,000; the credit terms were 2/10, n/30. Payment of the invoice was made within the discount period. The payment includes 6% sales tax on the net price. HydroTech also paid transportation charges $610 on the new machinery as well as $760 for installation of the machinery in appropriate locations. During the uploading and installation work, some of the machines fell from a forklift and were damaged. Repair of the damaged parts cost $2,170. After the machinery had been in use for 3 months, it was thoroughly cleaned and lubricated at a cost of $260. Prepare a list of items which should be capitalized by a debit to the machinery account and state the total cost of the new machinery. Question No. 3 (5 Marks) Herbor Company uses a periodic inventory system. The company's records show the beginning inventory of product no. T12 on January 1 and the purchase of this item during the current year to be as follows: Jan. 01 beginning inventory 900 units @ $10.00 $9,000 Feb 23 Purchase 1,200 units @ $11.00 13,200 Apr. 20 Purchase 3,000 units @ $11.20 33,600 May. 4 Purchase 4000 units @ $11.60 46,400 Nov. 30 Purchase 900 units @ $13.00 11,700 Instructions: A physical count indicates 1,500 units in inventory at year-end. Determine the cost of inventory based upon average cost method of inventory valuation