The following activities took place in March:

Mar. 1(a) Purchased children laptop toys from Ambrose Limited, $93,000, terms 1/10, n/30, FOB shipping point. (b)The responsible party paid the freight charges of $400. The goods were collected by the shipping company on 1 March and arrived at ITIs warehouse on 4 March.

1(c) Sold 15,000 Treasury shares at $2 each.

1(dPurchased 10% shareholding in Charlotte Limited, a supplier, as a long-term investment. The fair value of the 10% shareholding was $2,000,000 as at 1 March. The purchase consideration included a $1,800,000 note receivable due from Charlotte Limited and the related interest receivable balance of $96,000, $94,000 cash and a motor vehicle owned by ITI. The motor vehicle was originally obtained at $80,000.

1(e) Sold remote control helicopters valued at $288,000 to Vincent Limited, a wholesaler, terms n/20, FOB destination. The appropriate party paid delivery charges of $500. The goods were shipped on 1 March and arrived at the warehouse of Vincent Limited on 3 March.

2 A 10% share dividend was declared when the market value per share was $2.1.

3 Cash is received from Vincent Limited for the remote-control helicopters shipped on 1 March and arrived at the warehouse of Vincent Limited on 3 March.

4 Sold kids ride on cars to Gavin Limited, $83,300, terms n/30, FOB shipping point. The appropriate party paid freight charges of $315. The goods were shipped on 4 March and arrived at the warehouse of Gavin Limited on 6 March.

5 The management determined that the amount due from a customer, Tommy Limited, $34,500 is uncollectible as the company has closed down.

6 Purchased supplies of $5,800 on account from Jimmy Printing and Stationery Limited.

7(a) Paid cash to acquired 20,000 shares of its own at $2.3 each.

7(b) Received credit memorandum of $1,200 from Ambrose Limited for goods purchased in March.

8 Granted Gavin Limited an allowance of $980 (original price) due to discrepancy in the color of the ride on cars.

9 Sold flying disc and toy swings to Action Limited, list price of $82,075 with a 20% trade discount, n/20, FOB shipping point. The responsible party paid freight-charges of $640. The shipping document showed that the goods arrived at the warehouse of Action Limited on 12 March.

Mar. 10

Paid Ambrose Limited for the children laptop toys bought on 1 March and the amount of $140,000 on account for the purchase on 28 February. Purchases terms with Ambrose Limited in February was 2/10, n/30, FOB shipping point.

11. 11 Paid $108,000 for salary up to 10th March (Tuesday). All employees work a five-day week and are paid every four weeks on the following Wednesday, based on the number of days they have worked in the last four weeks. Employees are entitled to full pay on public holidays but not on Saturday and Sunday.

12. 12 Received payments from Gavin Limited, for the March sales.

13. 13 Acquired $100,000 toy musical instruments by signing a 90-day, 5% notes payable.

16. 16 Queenie Company Limited, a customer, has financial difficulties and unable to pay the outstanding balance of $210,000. The company has a long-term relationship with Queenie, and agreed to accept a 12%, 60-day notes from the customer to settle the outstanding balance.

17. 17 Share dividends were distributed.

21 Paid all dividends declared previously.

25 Received from Tom Limited, $120,000, as the prepayment for the leasing of part of the warehouse for one year from 1 April 2020 to 31 March 2021.

27. 27 Delivered inflatable castle of $39,750 on consignment to Vincent Trading Limited.

28. 28 Purchased $23,450 play mats from McMillan Company, FOB Destination, terms 1/10, n/45. The shipping document showed that the goods were received on 3rd April 2020.

29. 29 A cash dividend was declared for preference shares and a cash dividend of $0.04 per share was declared for ordinary shares.

30. 30 Received a check of $15,525 from the liquidator of Tony Limited. Tony Limited was closed down in December 2019 and the managing director of ITI authorized to write off $45,000, being the full amount outstanding in the accounts of Tony Limited, as of then.

The following information is available on 31 March 2020:

1. (a) Electricity incurred for the month amounted to $4,800.

2. (b) The employees receive a total salary of $27,000 for a five-day work week. All employees worked for the whole month of March.

3. (c) (i)Building, (ii) equipment and (iii) motor vehicles are recorded at historical cost and their estimated useful lives are 50 years, 5 years and 5 years respectively. No residual value is expected for the building. The building was acquired on 1 May 2016. The company uses straight-line method for all buildings. All the equipment and motor vehicles are acquired on 1 January

2017. The company uses unit of activity method to depreciate equipment and the double-declining balance method to depreciate all motor vehicles. The company expects that the salvage value of the equipment and motor vehicles is 10 % of the purchase cost. The equipment is for packing and the total amount of packing for 5 years are estimated to be 594,000 units. The total packing in March amounted to 9,800 units. Annual depreciation is calculated for each year from 1 January to 31 December, monthly depreciation is equal to (annual depreciation / 12).

(d) Physical count showed that $3,000 of supplies and (e) $698,000 of merchandise inventory remained on hand at 31 March 2020.

6. (f) The prepaid insurance was paid in last December covering a 12-month general insurance from January to December, 2020.

7. (g) Allowance for bad debt is estimated based on 10% of the closing accounts receivable balance due to dramatical down turn of the economy.

8. (h) Recognize interest expense for the month.

9. (i) Recognize interest revenue for the month.

Intelligent Toys, Inc (ITI) is a well establish toys trading company which adopts the periodic system. ITI prepares its financial statements on a monthly basis. The trial balance of ITI as at 29 February 2020 is presented as follows: Intelligent Toys, Inc Trial Balance As at 29 February 2020 Account No. Account Title Credit Debit ($) 280,000 450,000 496,800 380,000 443,112 13,500 6,480,000 667,680 80,000 201 Accounts Payable 112 Accounts Receivable 152 Accumulated Depreciation - Building 154 Accumulated Depreciation - Equipment 156 Accumulated Depreciation - Motor Vehicle 113 Allowance for Doubtful Accounts 151 Building 101 Cash 291 Dividends Payable 153 Equipment 115 Interest Receivable 140 Long-term Investment 121 Merchandise Inventory 155 Motor Vehicle 114 Notes Receivable 131 Prepaid Insurance 320 Retained Earnings 241 Salaries Payable 311 Share Capital - Ordinary $1 par value, 5,000,000 shares authorized, 4,000,000 shares issued and 3,985,000 shares outstanding 312 Share Capital - Preference 4%, $100 par value, noncumulative, 50,000 shares authorized, 40,000 shares issued and outstanding 313 Ordinary 314 Share Premium - Preference 315 Share Premium - Treasury 132 Supplies 330 Treasury Shares (15,000 shares) 660,000 96,000 500,000 650.000 555,000 1,800,000 12,000 1,384,808 70,200 4,000,000 4,000,000 560,000 200,000 6,000 6,240 37,500 11,914,420 11,914,420 1 **Transactions in March and adjustment data are shown in separate email ** The information will be released via email on 9 November 2020, 18:00 The alternative treatment in Slide 18 of Lecture 4 powerpoints is not adopted by ITI. Instructions (The following is the procedures of the accounting cycle after analyzing the source documents for transactions taken place) (a) (b) (C) (d) (e) Enter the March 1 balances in the ledger accounts. (for your own reference) Journalize the March transactions. Use the accounts provided in the chart of accounts on page 12. Post to the ledger accounts. (for your own reference) Prepare a trial balance at 31 March 2020. (for your own reference) Journalize and post adjusting entries. (posting is for your own reference) Prepare an adjusted trial balance. Prepare an income statement and a retained earnings statement for March and a statement of financial position as at 31 March 2020. Requirements for submission (1) Input the Journal Entries required in part (b) with the Account No and Amount into blackboard. Please input the items required as shown in page 4 & 5. Please refer to the chart of accounts on page 12. (32 marks) (2) Input the Journal Entries required in part (e) with the Account No and Amount into blackboard. Please input the items required as shown in page 6. (22 marks) (3) Input the balance of each account of the trial balance required in part (f) into blackboard. Please input the items required as shown in page 7. (16 marks) (4) Input the figures of part (g) including the income statement and retained earnings statement for September and statement of financial position as at March 31 into blackboard. Please input the items required as shown in page 8, 9 & 10. (12 marks) Requirement 3 (106 points) 2 points for each item Adjusted Trial Balance as at 31 March 2020 Dr S Cr S Account No 201 112 152 154 156 113 611 151 101 711 712 713 291 153 514 612 613 820 615 631 221 115 415 150 140 620 121 630 155 231 114 292 131 513 512 511 Accounts Payable Accounts Receivable Accumulated Depreciation - Building Accumulated Depreciation - Equipment Accumulated Depreciation - Motor vehicle Allowance for Doubtful Accounts Bad Debt Expense Building Cash Depreciation Expense - Building Depreciation Expense - Equipment Depreciation Expense - Motor Vehicle Dividends Payable Equipment Freight-in Freight-out Fuel Expense Gain on Disposal Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Land Item 173 Item 174 Item 175 Item 176 Item 177 Item 178 Item 179 Item 180 Item 181 Item 182 Item 183 Item 184 Item 185 Item 186 Item 187 Item 188 Item 189 Item 190 Item 191 Item 192 Item 193 Item 194 Item 195 Item 196 Item 197 Item 198 Item 199 Item 200 Item 201 Item 202 Item 203 Item 204 Item 205 Item 206 Item 207 Item 208 Item 209 Item 210 Item 211 Item 212 Item 213 Item 214 Item 215 Item 216 Item 217 Item 218 Item 219 Item 220 Item 221 Item 222 Item 223 320 Long-term Investment Loss on Disposal Merchandise Inventory Miscellaneous Expense Motor Vehicle Notes Payable Notes Receivable Ordinary Share Dividends Distributable Prepaid Insurance Purchase Discounts Purchase Returns and Allowances Purchases Retained Earnings Salaries Expense Salaries Payable Sales Returns and Allowances Sales Revenue Share Capital - Ordinary Share Capital - Preference Share Premium - Ordinary Share Premium - Preference Share Premium - Treasury Supplies Supplies Expense Treasury Shares Unearned Rent Revenue Utilities Expense 616 241 411 410 311 312 313 314 315 132 618 330 281 619 Item 224 Item 225 7 Requirement 4 (78 points) 5 points for each item except Item 234 Intelligent Toys, Inc. Income Statement For the month ended 31 March 2020 Net Sales Item 226 Cost of goods purchased Item 227 Cost of goods available for sale Item 228 Cost of Goods Sold Gross Profit Item 229 Item 230 Total operation expense Item 231 Operating Profit Item 232 Net Income Item 233 8 Intelligent Toys, Inc. Retained Eamings Statement For the month ended 31 March 2020 Ending retained Earnings (3 points) Item 234 Intelligent Toys, Inc. Statement of Financial Position as at 31 March 2020 Property, Plant and Equipment Current Liabilities Item 239 Sub-total Long Term Investments Current Assets Item 235 Item 236 Sub-total Equity Sub-total Total Assets Item 237 Item 238 Sub-total Total Liabilities & Equity Item 240 Item 241 10 Chart of Accounts Account No 201 112 152 154 156 113 611 151 101 711 712 713 291 153 514 612 613 820 615 631 221 115 415 150 140 620 Account Names Accounts Payable Accounts Receivable Accumulated Depreciation - Building Accumulated Depreciation - Equipment Accumulated Depreciation - Motor vehicle Allowance for Doubtful Accounts Bad Debt Expense Building Cash Depreciation Expense - Building Depreciation Expense - Equipment Depreciation Expense - Motor Vehicle Dividends Payable Equipment Freight-in Freight-out Fuel Expense Gain on Disposal Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Land Long-term Investment Loss on Disposal Account No 121 630 155 231 114 292 131 513 512 511 320 241 616 410 411 311 Account Names Merchandise Inventory Miscellaneous Expense Motor Vehicle Notes Payable Notes Receivable Ordinary Share Dividends Distributable Prepaid Insurance Purchase Discounts Purchase Returns and Allowances Purchases Retained Earnings Salaries Payable Salaries Expense Sales Revenue Sales Returns and Allowances Share Capital - Ordinary Share Capital - Preference Share Premium - Ordinary Share Premium - Share Premium - Treasury Supplies Supplies Expense Treasury Shares Unearned Rent Revenue Utilities Expense 312 313 314 315 132 618 330 281 619 12 Intelligent Toys, Inc (ITI) is a well establish toys trading company which adopts the periodic system. ITI prepares its financial statements on a monthly basis. The trial balance of ITI as at 29 February 2020 is presented as follows: Intelligent Toys, Inc Trial Balance As at 29 February 2020 Account No. Account Title Credit Debit ($) 280,000 450,000 496,800 380,000 443,112 13,500 6,480,000 667,680 80,000 201 Accounts Payable 112 Accounts Receivable 152 Accumulated Depreciation - Building 154 Accumulated Depreciation - Equipment 156 Accumulated Depreciation - Motor Vehicle 113 Allowance for Doubtful Accounts 151 Building 101 Cash 291 Dividends Payable 153 Equipment 115 Interest Receivable 140 Long-term Investment 121 Merchandise Inventory 155 Motor Vehicle 114 Notes Receivable 131 Prepaid Insurance 320 Retained Earnings 241 Salaries Payable 311 Share Capital - Ordinary $1 par value, 5,000,000 shares authorized, 4,000,000 shares issued and 3,985,000 shares outstanding 312 Share Capital - Preference 4%, $100 par value, noncumulative, 50,000 shares authorized, 40,000 shares issued and outstanding 313 Ordinary 314 Share Premium - Preference 315 Share Premium - Treasury 132 Supplies 330 Treasury Shares (15,000 shares) 660,000 96,000 500,000 650.000 555,000 1,800,000 12,000 1,384,808 70,200 4,000,000 4,000,000 560,000 200,000 6,000 6,240 37,500 11,914,420 11,914,420 1 **Transactions in March and adjustment data are shown in separate email ** The information will be released via email on 9 November 2020, 18:00 The alternative treatment in Slide 18 of Lecture 4 powerpoints is not adopted by ITI. Instructions (The following is the procedures of the accounting cycle after analyzing the source documents for transactions taken place) (a) (b) (C) (d) (e) Enter the March 1 balances in the ledger accounts. (for your own reference) Journalize the March transactions. Use the accounts provided in the chart of accounts on page 12. Post to the ledger accounts. (for your own reference) Prepare a trial balance at 31 March 2020. (for your own reference) Journalize and post adjusting entries. (posting is for your own reference) Prepare an adjusted trial balance. Prepare an income statement and a retained earnings statement for March and a statement of financial position as at 31 March 2020. Requirements for submission (1) Input the Journal Entries required in part (b) with the Account No and Amount into blackboard. Please input the items required as shown in page 4 & 5. Please refer to the chart of accounts on page 12. (32 marks) (2) Input the Journal Entries required in part (e) with the Account No and Amount into blackboard. Please input the items required as shown in page 6. (22 marks) (3) Input the balance of each account of the trial balance required in part (f) into blackboard. Please input the items required as shown in page 7. (16 marks) (4) Input the figures of part (g) including the income statement and retained earnings statement for September and statement of financial position as at March 31 into blackboard. Please input the items required as shown in page 8, 9 & 10. (12 marks) Requirement 3 (106 points) 2 points for each item Adjusted Trial Balance as at 31 March 2020 Dr S Cr S Account No 201 112 152 154 156 113 611 151 101 711 712 713 291 153 514 612 613 820 615 631 221 115 415 150 140 620 121 630 155 231 114 292 131 513 512 511 Accounts Payable Accounts Receivable Accumulated Depreciation - Building Accumulated Depreciation - Equipment Accumulated Depreciation - Motor vehicle Allowance for Doubtful Accounts Bad Debt Expense Building Cash Depreciation Expense - Building Depreciation Expense - Equipment Depreciation Expense - Motor Vehicle Dividends Payable Equipment Freight-in Freight-out Fuel Expense Gain on Disposal Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Land Item 173 Item 174 Item 175 Item 176 Item 177 Item 178 Item 179 Item 180 Item 181 Item 182 Item 183 Item 184 Item 185 Item 186 Item 187 Item 188 Item 189 Item 190 Item 191 Item 192 Item 193 Item 194 Item 195 Item 196 Item 197 Item 198 Item 199 Item 200 Item 201 Item 202 Item 203 Item 204 Item 205 Item 206 Item 207 Item 208 Item 209 Item 210 Item 211 Item 212 Item 213 Item 214 Item 215 Item 216 Item 217 Item 218 Item 219 Item 220 Item 221 Item 222 Item 223 320 Long-term Investment Loss on Disposal Merchandise Inventory Miscellaneous Expense Motor Vehicle Notes Payable Notes Receivable Ordinary Share Dividends Distributable Prepaid Insurance Purchase Discounts Purchase Returns and Allowances Purchases Retained Earnings Salaries Expense Salaries Payable Sales Returns and Allowances Sales Revenue Share Capital - Ordinary Share Capital - Preference Share Premium - Ordinary Share Premium - Preference Share Premium - Treasury Supplies Supplies Expense Treasury Shares Unearned Rent Revenue Utilities Expense 616 241 411 410 311 312 313 314 315 132 618 330 281 619 Item 224 Item 225 7 Requirement 4 (78 points) 5 points for each item except Item 234 Intelligent Toys, Inc. Income Statement For the month ended 31 March 2020 Net Sales Item 226 Cost of goods purchased Item 227 Cost of goods available for sale Item 228 Cost of Goods Sold Gross Profit Item 229 Item 230 Total operation expense Item 231 Operating Profit Item 232 Net Income Item 233 8 Intelligent Toys, Inc. Retained Eamings Statement For the month ended 31 March 2020 Ending retained Earnings (3 points) Item 234 Intelligent Toys, Inc. Statement of Financial Position as at 31 March 2020 Property, Plant and Equipment Current Liabilities Item 239 Sub-total Long Term Investments Current Assets Item 235 Item 236 Sub-total Equity Sub-total Total Assets Item 237 Item 238 Sub-total Total Liabilities & Equity Item 240 Item 241 10 Chart of Accounts Account No 201 112 152 154 156 113 611 151 101 711 712 713 291 153 514 612 613 820 615 631 221 115 415 150 140 620 Account Names Accounts Payable Accounts Receivable Accumulated Depreciation - Building Accumulated Depreciation - Equipment Accumulated Depreciation - Motor vehicle Allowance for Doubtful Accounts Bad Debt Expense Building Cash Depreciation Expense - Building Depreciation Expense - Equipment Depreciation Expense - Motor Vehicle Dividends Payable Equipment Freight-in Freight-out Fuel Expense Gain on Disposal Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Land Long-term Investment Loss on Disposal Account No 121 630 155 231 114 292 131 513 512 511 320 241 616 410 411 311 Account Names Merchandise Inventory Miscellaneous Expense Motor Vehicle Notes Payable Notes Receivable Ordinary Share Dividends Distributable Prepaid Insurance Purchase Discounts Purchase Returns and Allowances Purchases Retained Earnings Salaries Payable Salaries Expense Sales Revenue Sales Returns and Allowances Share Capital - Ordinary Share Capital - Preference Share Premium - Ordinary Share Premium - Share Premium - Treasury Supplies Supplies Expense Treasury Shares Unearned Rent Revenue Utilities Expense 312 313 314 315 132 618 330 281 619 12