Assignment (10 Marks)

(Principles of accounting 2)
Spring 2017/2018
Dr. Rabie Eid

Ex.1 Romano Company had the following purchases and sales during 2017.
Purchases
Sales
Units Unit Cost Units
Selling Price/Unit
1/1 Beginning inventory 1,000 $5

3/3 Purchase 600 $6

3/5 Sales 700 $ 10

3/10 Purchase 2,000 $7

2/11 Sales 800 $ 11

5/11 Purchase 400 $8

3/12 Sales 1,300 $ 11

Operating expense $ 10,000

Tax rate 20%
Instructions
A. By Using Periodic Inventory Systems
1. prepare comparative income statement ( FIFO, LIFO and A. Cost)
2. Inventory turnover ( FIFO, LIFO and A. Cost )
3. Days in Inventory ( FIFO, LIFO and A. Cost)
B. By Using Perpetual Inventory Systems,
1. prepare comparative income statement ( FIFO, LIFO and A. Cost)
2. Inventory turnover ( FIFO, LIFO and A. Cost )
3. Days in Inventory ( FIFO, LIFO and A. Cost)

Ex.2 The Laird Company's bank statement for the month of April showed a
balance per bank of $17,907.45 The company's Cash account in the
general ledger had a balance of $13,589.45 at April 30. Other information
is as follows:
-Deposits in transit: $ 2,201.40
-Outstanding checks: $ 5,904.00
-Errors: Check No. 3355 payable to Lynch Company was recorded in the cash
payments journal and cleared the bank for $1,226.00 A review of the
accounts payable subsidiary ledger shows a $1,262.00 credit balance in the
 account of Lynch Company and that the payment to them should have been
for $1,262.00.
-Bank memoranda:
a. Debit-NSF check from Zaid Company for 425.60
b. Debit memorandum for $50 for check printing charges.
c. The bank included a credit memorandum for $1,035 which represents
collection of a customer's note by the bank for the company; principal amount
of the note was $1,000 and interest was $50. Less bank collection fee $ 15.00.
Instructions
(a) Prepare a bank reconciliation for the Morton Boat Company at April 30.
(b) Prepare any adjusting entries necessary as a result of the bank
reconciliation.

Ex.3 Wolder Co. lends Higley Co. $100,000 on MAY 1, 2017, accepting a ten-month, 9%
interest note. If Wolder presents the note to Higley Co. on March 1, the maturity date,
Wolder Co. prepares financial statements as of 31, 12(December) yearly.
Required: journal entries by Wolder & Higley

Ex.4 In 2014 ABC Systems had Gross credit sales of $300,600 million for the year, Sales
return and allowance 1,150 million, sales discount 2,450 million . It had a beginning
accounts receivable (net) balance of $28,000 million and an ending accounts receivable
balance of $42,250 million(allowance for doubtful account 4,250 million).
Required: computed receivable turnover ratio & days in year for receivable.

Ex.5 Lenard Company purchases a delivery truck at a cash price of $31,500. Related
expenditures are sales taxes $1,320, painting and lettering $500, motor vehicle license
$80, and a three-year accident insurance policy $1,600.
Instructions: Prepare the journal entry to record truck cost and other transactions.

Ex.6 ABC Corporation purchased a new machine for its assembly process on March 31,
2005. The cost of this machine was $250,500. The company estimated that the machine
would have a salvage value of $10,500 at the end of its service life. Its life is estimated at
5 years and its working hours are estimated at 10,000 hours (consumes as the fallowing
2750 h., 2250 h., 2000 h, 1750 h, 1250 h. Year-end is December 31.
Instructions:
1. Compute the depreciation expense under the following methods during (2005-
2009).
(a) Straight-line depreciation.
(b) Activity method.
(c) Double-declining balance.
2. The effect on balance sheet & income statement (2005, 2006). For each method.
3. Journal entry (2007, 2008) for each method.