Section A (25%)-Compulsory Long Question There is ONE question in this section. Answer the question in this section on A4 single-line papers. Explanations of the journal entries are not required. Correct your answers to 2 decimal places if necessary. Show your working Question Al Minnie Frozen Food Company ("Minnie") engages in the business of selling frozen food on-line. The company adjusts its accounts monthly, closes its accounts annually on 31 December. Minnie uses a perpetual inventory system and the gross profit rate is 40%. Below is the unadjusted tnal balance of Minnie as at 31 December 2021. Minnie Frozen Food Company Unadjusted Trial Balance 31 December 2021 Debit Credit s s Cash 621.100 Accounts receivable 696,990 Interest receivable 11.000 Supplies 7.710 Inventory 199,500 Prepaid rent 165,000 Office fixtures and fittings 180,000 Accumulated depreciation office fixtures and fittings 82.000 Notes receivable (due on 31 December 2021) 240,000 Accounts payable 37,000 Income taxes payable 13.000 Ordinary shares 1,000,000 Retained earnings 467,400 Sales revenues 2,020,000 Interest revenue 11.000 Cost of goods sold 575.500 Selling and administration expense 157.000 Rent expense 405,000 Salaries expense 320,000 Supplies expense 15,870 Utilities expense 12,730 Depreciation expense 10,000 Income taxes expense 13,000 Total 3,630,400 3.630,400 Page 3 of 11 Question Al continued) The following events have not yet been recorded / adjusted in the books of Minnie (1) Supplies on hand as at 31 December 2021 amounted to $700. 2) Prepaid rent was paid and recorded by Minnie on 1 November 2021 to cover rent for the period 1 November 2021 to end of February 2022. (3) There was an unrecorded and unpaid salary of S15,000 camed by a staff for December 2021 (4) 55,000 was received from a customer in advance on 31 December 2021 for the frozen food to be delivered on 4 January 2022 (5) The 1-year note receivable was signed on 1 January 2021 at 5% interest per annum with Mr Micky. The entire note and all the accrued interest were due and received on 31 December 2021. No entries were made for the adjustment and the repayment received in December 2021. (6) Minnie's auditor estimated that the income taxes expense for the entire year was $14,000 which to be paid next year (7) Minnie promised to deliver 20 packs of high quality steak to Disney Company on 3 January 2022 and the payment will be made upon delivery (8) A customer retumed 2 packs of frozen steak (selling price: $275 per pack) to Minnie on 30 December 2021 and got a cash refund. ) On 31 December 2021, Minnic made an inventory taking and found that there was $198.000 inventory on hand Required: (a) Prepare the necessary joumal / adjusting entries to update the books of Minnie. Use the account titles given in the Trial Balancs or create new accounts where appropriate. No explanation is required. If no adjusting entries are required, statc "No entry" and name the accounting principle applied (22 marks) b) Compute the ending balance of the Retained Earnings as at 31 December 2021. Show your workings (3 marks) -End of Section A. Page 4 of 11 Section B (15%)-Compulsory Short Questions There are FIVE questions in this section. Answer ALL questions in this section on A4 single- line papers. Explanations of the journal entries are not required. Correct your answers to 2 decimal places if necessary. Show your workings Question B1 Below is the shareholders' equity section of Andrea Corporation ("Andrea's Statement of Financial Position as at 1 January 202i. Shareholders' Equity Contributed Capital: Ordinary shares S2 par, 800,000 shares authorized. 100.000 shares issued $200,000 Share premium: Ordinary shares 60.000 260,000 Retained eamings 250.000 Total shareholders' equity 510,000 During 2021, the following events occurred in sequential order (1) Andrea issued 300,000 of its $2 per value ordinary shares for $3.2 per share. (2) Andrea issued 5,000 of its ssd par value 6. camulative preference shures, for $92 per share. Andrea can issue up to 100,000 of its preference shares (3) Andrea purchased 8.000 of its ordinary shares at a cost of 54.2 per share in the open marker. (1) On 31 December 2021, the board of directors declared and paid all the dividends, including 80.2 per share to ordinary shareholders, as well as satisfying annual preference share dividend requirements. (5) On 31 December 2021, Mr Chan, a shareholder sted 10,000 ordinary shares of Andrea as a security to borrow a bank loan to purchase a car for his own use. The market price of the share was $5.4 on 31 December 2021. Required: (a) Prepare the journal entries for the above transactices. If an event does not require any entry, state "No entry and to explanation is required (12 marks) (1) Compute the Retained Earnings balance at 31 December 2021. given the company's profit for 2021 is $220,000. Show your workings (3 marks) 2 Page 5 of 11 Question B2 Part Mirror Company, a land developer bought a truck for $3,000,000 on 26 February 2020. The truck had an estimated useful life of 10 years with a residual value of $500,000, or had an estimated operation output of 50,000 hours. The company adjusts its account annually with the year-end date at 31 December Required: (a) Compute the depreciation expenses on the truck in 2020 and 2021 by using the following methods: Straight-line (using half year convention); (2 marks) (1) 200%-declining-balance (calculated to the nearest whole month); and 2 marks) (it) Units-of-output method (hours of operations: 4,000 in 2020; 6.500 in 2021) (2 marks) (6) Assume Mirror Company adopts straight-line method as shown in (axo above for the truck bought on 26 February 2020 and disposed it on 31 January 2022 for $2,400,000 cash. Prepare the following joumal entries (6) Update the depreciation for the year 2022 before the disposal 2 marks) C) Dispose the truck at 31 January 2022 (4 marks) Part II Edan Company purchased a delivery lorry on January 2014 for $840,000. The lorry has an estimated useful life of 12 years and no residual value. On 1 January 2021, the company incurred the following expenditure for the lorry o purchased a new engine at a cost of $48,000. () installed the new engine to the lorry at a cost of $2,000, and Gil) painted the lorry at a cost of $2.500 after 7 years of use On the same date, the company's management expects the total estimated useful life of the lorry is revised to 23 years with no residual value. The company uses the straight-line method of depreciation (calculated to the nearest whole month) and adjusts its accounts annually on 31 December Required: Prepare the journal entry at 31 December 2021 to record the depreciation for 2021. Show your workings marks) Page 6 of 11 Question B3 Part 1 At 31 March 2022, the balance of the Cash account according to the records of Ivan Company ("IC"> was $38.244. The bank statement showed a balance of 538.420 as at 31 March 2022. Prepare the bank reconciliation of IC at 31 March 2022, using the following information There were no outstanding checks and deposit in transit at the end of 28 February 2022 (1) The total deposit shown in the bank statement was $28,000 while the accounting records of IC showed the total deposit made in March was $34,400. 2) The following checks issued by IC were still outstanding Check no. 911, 5200, no. 912, 51,000, 10.914, $641. (3) A bank service charge showed in the bank statement was 5100 4) A note receivable for $6,050 (included an interest of 5456) was directly credited to IC's account by the bank (5) A check for $650 drawn by a customer, James Chow was deducted from IC's account by the bank and returned with the notation "NSF. (6) IC's check no. 238 issued in payment of S4365 to purchase office equipment but erroneously recorded in IC's accounting records as $4.000 Required: (a) Prepare the bank reconciliation statement for the month of March 2022 (8 marks) (b) Prepare the necessary adjusting journal entries to update the accounting record (3 marks) Page 7 of 11 Question B3 continued Part II The trial balance as at 31 December 2021 of Ace Company included the following accounts: Accounts receivable at 31 December 2021 $160,000 Allowance for impairment S7.300 (Dr) At the end of the year, an aging of the accounts receivable indicated the estimated uncollectible amount for accounts receivables was $24,400. The company adjusts its account annually. Required: (a) Prepare joumal entries to record the impairment loss of receivable in 2021 under Statement of Financial Position approach. (1) Prepare partial Statement of Financial Positions to show the accounts receivables at 31 December 2021 (2 marks) (2 marks) Page 8 of 11 Question B4 The data below are taken from the financial statements of Fast Delivery Company Income Statement: 2021 Profit $270,050 Depreciation expense 48.000 Amortization of trademark 25.500 Gain loss on sale of equipment Statement of Financial Position: 31 Dec 2021 31 Dec 2020 Cash ?!? $129.500 Accounts receivable 27.00 00 Inventory 28,900 27.000 Prepaid expenses 42.000 47,000 Accounts payable 35,000 33.000 Accrued expense payable 17.550 10.000 Additional Information: (1) Borrowed a loan from bank for the amount of $200,000 (2) Sold an old van with net book value of 123,000 for cash at $141,000 (3) Purchased a new van for cash at $230,000 (4) Acquired marketable investment with cash of 184,000. (5) Issued 150.000 ordinary shares at S15 per share. (6) Acquired 35,000 treasury shares from market at $2 each. Required: Prepare the statement of cash flows for the year ended 31 December 2021 for Fast Delivery Company using the indirect method. Place parentheses around these dollar amounts representing cash outlays. (15 marks) Page 9 of 11 Question BS Below is the condensed statement of financial position and income statement of Ross Limited Ross Limited Ross Limited Statement of Financial Position Income Statement 31 December 2021 For the year ended 31 December 2021 (S in million) (Sin million) 3.200 (114) Cash Accounts receivable Inventory Prepaid expenses Land Machine Accumulated depreciation Machine 95 175 275 60 725 SO (10) 1.400 2,020) Sales Sales Return and Allowance Net Sales Cost of goods sold Gross profit Operating expenses Operating profit Interest expense Protit before taxes Income taxes Net profit (926) 2 (40) 100 (28) 72 Accounts payable Income tax payable Uncanned revenue Notes payable (due on 31 Dec 2025) Ordinary shares (par: S1.25 cach) Share premium: Ordinary shares Retained earnings 120 24 50 380 400 302 124 1,400 Additional Information: (1) Beginning and ending balances of all assets, liabilities and equity items remained almost constant throughout the year. (2) All sales and sales retums are on credit sales. (3) Market price per share on 31 December 2021 was S1.56 per share. Required: Compute the following for Ross Limited. Round your answers to two decimal places. All answers MUST be expressed in the unit as specified in the question, if any. Show your workings (a) Current Ratio (2 marks) (b) Quick Ratio (2 marks) (eGross Profit Rate (in (2 marks) (d) Accounts Receivable Tumover Rate (2 marks) Page 10 of 11 Question B5 (continued) (e) Debt Ratio (in %) (2 marks) (1) Return on Equity (%) (2 marks) (g) Price-Earnings Ratio