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  • Afw1000 A1

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    Shin Yukina
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    During its first month of operations, Sparkle Car Wash: 1) Issued 20,000 shares and received $40,000 in cash from owners. 2) Obtained a $120,000 loan from the bank. 3) Purchased an existing car wash for $150,000 cash, allocating values of $25,000 to land and $75,000 and $50,000 to buildings and equipment. 4) Received cleaning supplies on account and paid $1,500, with $1,000 remaining to be paid next month. 5) Earned $7,000 in gross receipts from car washes. 6) P

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    During its first month of operations, Sparkle Car Wash: 1) Issued 20,000 shares and received $40,000 in cash from owners. 2) Obtained a $120,000 loan from the bank. 3) Purchased an existing car wash for $150,000 cash, allocating values of $25,000 to land and $75,000 and $50,000 to buildings and equipment. 4) Received cleaning supplies on account and paid $1,500, with $1,000 remaining to be paid next month. 5) Earned $7,000 in gross receipts from car washes. 6) P

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    124 views3 pages

    Afw1000 A1

    Uploaded by

    Shin Yukina
    During its first month of operations, Sparkle Car Wash: 1) Issued 20,000 shares and received $40,000 in cash from owners. 2) Obtained a $120,000 loan from the bank. 3) Purchased an existing car wash for $150,000 cash, allocating values of $25,000 to land and $75,000 and $50,000 to buildings and equipment. 4) Received cleaning supplies on account and paid $1,500, with $1,000 remaining to be paid next month. 5) Earned $7,000 in gross receipts from car washes. 6) P

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    Attribution Non-Commercial (BY-NC)
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    of 3

    Question1 The following transactions are entered into by Sparkle Car Wash during its first month of operations:

    a) Articles of incorporation are filed with the state, and 20,000 shares capital are issued. Cash of RM40,000 is received from the new owners for the shares. b) A five-year promissory note is signed at the local bank. The cash received from the loan is RM120,000. c) An existing car wash is purchased for RM150,000 in cash. The values to the land, building and equipment are RM25,000, RM75,000 and RM50,000, respectively. d) Cleaning supplies are purchased on account for RM2,500 from a distributor. All of the supplies are used in the first month. e) During the first month, RM1,500 is paid to the distributor for the cleaning supplies. The remaining RM1,000 will be paid next month. f) Gross receipts from car washes during the first month of operations amount to RM7,000. g) Wages and salaries paid in the first month of operations amount to Rm2,000. h) The utility bill of RM800 for the month is paid. i) A total of RM1,000 in dividends is paid to the owners.

    Question1 1. (8marks) Assets Transaction Cash Land Liabilities Owners Equity

    Building Equipment Account Note Share Retained Payable Payable Capital Earning 40,000 120,000 75,000 50,000 2,500 2,500 (1,500) 7,000 (2,000) (800) (1,000)

    a b c d e f g h i

    40,000 120,000 (150,000) 25,000

    (1,500) 7,000 (2,000) (800) (1,000)

    Khoo Mun Keat

    21409897

    AFW1000

    2. Profit for the month (4marks) show working. 3. Balance sheet at the end of the month (8marks)

    Question 2 1. Did the bookkeeper prepare the correct journal entry to account for the clients deposit? Explain your answer. (3marks) 2. What would you do as controller for the firm? (3marks) As a controller for the firm,

    Question 3 1. Explain, using the necessary calculation, how the president came up with an inventory turnover ratio of 90 times. (3marks) 2. Do you think the company should report a turnover ratio of 90 times? If not, explain why you disagree and explain, with calculations, what you think the ratio should be. (3marks)

    3. Assume you are the controller for Garden fresh. What will you tell the president? (3marks)

    Khoo Mun Keat

    21409897

    AFW1000

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