CONCEPTUAL FRAMEWORK

(a) 8 Expense recognition principle.

(b) 6 Historical cost principle.
(c) 9 Full disclosure principle.
(d) 2 Going concern assumption.
(e) 10 Revenue recognition principle.
(f) 1 Economic entity assumption.
(g) 4 Periodicity assumption.
(h) 7 Fair value principle.
(I) 3 Monetary unit assumption.

1)
Agree. The full disclosure principle recognizes that reasonable condensation and summarization of the details
financial position are essential to readability and comprehension. Thus, in determining what is full disclosur
whether omission will mislead readers of the financial statements. Generally, companies present only the tota
of financial position unless some special circumstance is involved (such as a possible restriction on the use
however, the company's presentation would be considered appropriate and in accordance with the full dis

2)
From the facts, it is difficult to determine whether to agree or disagree with the president. The president's app
principle. Consistency requires that accounting entities give accountable events the same accounting treatme
given business enterprise. It says nothing concerning consistency of accounting principles among business en
viewpoint, it might be useful to report the information on an average-cost basis. But, as indicated above, the
(Depends)
n and summarization of the details of a company's operations and
determining what is full disclosure, the accountant must decide
, companies present only the total amount of cash on a statement
as a possible restriction on the use of the cash). In most cases,
and in accordance with the full disclosure principle. (Agree)

the president. The president's approach is not a violation of any

vents the same accounting treatment from period to period for a
ing principles among business enterprises. From a comparability
basis. But, as indicated above, there is no requirement to do so.
 TWAIN CORPORATION
Income Statement
For the Year Ended June 30, 2020
Revenue
Sales Revenue
Less: Sales Discounts $32,500
Sales returns & allowance $45,300
Net Sales
Cost of goods sold
Gross profit
Selling expenses
Sales commissions expense $97,600
Salaries and wages expense $56,260
Travel expense $28,930
Delivery expense $21,400
Entertainment expense $14,820
Plant utilities expense $9,030
Maintenance and repairs expense $6,200
Depreciation expense $4,980
Misc. Selling expenses $4,715 $243,935
General and Administrative expense
Maintenance and repairs expense $9,130
Property tax expense $7,320
Bad Debt Expense $4,850
Depreciation expense $7,250
Office supplies expense $3,450
Office utilities expense $2,820
Salaries and wages expense $6,000 $40,820
Other income and expense
Dividend Revenue
Income from operations
Finance Cost: Interest expense
Income before income tax
Income tax expense
Income from continuing operations
Discontinued operations
Loss from discontinued operations, net of tax
NET INCOME

Earnings per Share

[($959,004-$14,200)/105.000]
[(Net Income - Dividend for Prefered Shares)/Outstanding Ordinary Shares]
$1,850,000

$ (77,800)
$1,772,200
$ (748,200)
$1,024,000 TWAIN CORPORATION
Retained Earnings Statement
For the Year Ended June 30, 2020
Retained earnings, July 1, 2019, as reported
Correction of depreciation understatement, net of tax
Retained earnings, July 1, 2019, with correction
Add: Net income
Less:
Dividends declared on preference shares
Dividends declared on ordinary shares
Retained earnings, June 30, 2020

$ (284,755)

$45,000
$1,353,755
$ (97,000)
$1,256,755
$ (251,351)
$1,005,404

$ (46,400)
$959,004

$8.998
PORATION
ngs Statement
d June 30, 2020
$ 432,000
$ (17,700)
$ 414,300
$ 959,004

$ 9,000
$ 37,000 $ (46,000)
$ 1,327,304
 Debit Credit
Cash £?
Equipment 48000
Prepaid Insurance 1000
Supplies 1200
Accumulated Depreciation - Equipment £ 9.000
Trademarks 950
Unearned Service Revenue 2000
Salaries and Wages Payable 500
Accounts Payable 10000
Bonds Payable (due 2022) 9000
Share Capital - Ordinary 10000
Retained Earnings 20000
Service Revenue 10000
Salaries and Wages Expense 9000
Interest Expense 900
Rent Expense 1200
Insurance Expense 1400
Total £? £?
The complete trial balance is below:
Debit Credit
Cash £6,850
Equipment £48,000
Prepaid Insurance £1,000
Supplies £1,200
Accumulated Depreciation - Equipment £9,000
Trademarks £950
Unearned Service Revenue £2,000
Salaries and Wages Payable £500
Accounts Payable £10,000
Bonds Payable (due 2022) £9,000
Share Capital - Ordinary £10,000
Retained Earnings £20,000
Service Revenue £10,000 Service Revenue
Salaries and Wages Expense £9,000 Salaries and Wages Expense
Interest Expense £900 Interest Expense
Rent Expense £1,200 Rent Expense
Insurance Expense £1,400 Insurance Expense
Total £70,500 £70,500 Net Income (Loss)
 ABBEY CORPORATI
Statement of Financial Po
As of December 31, 20
Current Assets
Cash £6,850
Prepaid insurance £1,000
Supplies £1,200
Total current assets £9,050

Non-Current Assets
Property,plant, and equipment
Equipment £48,000
Less: Accumulated depreciation-equipment £ (9,000)
Total property,plant, and equipment £39,000
Intangible assets
Trademark £950
Total non-current assets £39,950
Total assets £49,000

Computation
*Perhitungan dividen: Ending R/E = Beginning R/E + Net Income - Dividen
Ending R/E = £17,500

£10,000
s and Wages Expense £ (9,000)
£ (900)
£ (1,200)
£ (1,400)
£ (2,500)
 ABBEY CORPORATION
Statement of Financial Position
As of December 31, 2019
Current Liabilities
Accounts payable £10,000
Salary and Wages payable £500
Unearned service revenue £2,000
Total current liabilities

Non-Current Liabilites
Bonds payable
Total liabilities

Equity
Share capital-ordinary £10,000
Retained earnings (£20.000 - £2500*) £17,500
Total equity
Total equity and liabilities
£12,500

£9,000
£21,500

£27,500
£49,000
 DREAM COMPANY
STATEMENT OF CASHFLOW
For the Year Ended December, 31 2018 (in $)
DIRECT METHOD

Cash Flow from Operating Activities

Cash receipt from customer $631,000
Cash paid to supplier $(347,000)
Cash paid for operating expense $(75,300)
Cash paid for interest expense $(12,000)
Cash paid for income tax $(64,100)
Net Cash Provided by Operating Activities $132,600

Cash Flow from Investing Activities

Cash paid for purchasing equipment $(152,700)
Cash receipt from selling investment $68,000
Net Cash Used by Investing Activities $(84,700)

Cash Flow from Financing Activities

Cash paid to retire bonds payable $(100,000)
Cash receipt from issuing shares $90,000
Cash paid for dividend $(46,400) (221,500-164,500-103,400)
Net Cash Used by Financing Activities $(56,400)
Net decrease in cash $(8,500)
Cash balance January, 1 2018 $63,500
Cash balance December, 31 2018 $55,000

Computation:
Cash receipts from customers
Sales
add: Decrease in accounts receivable
Cash receipts from customers

Cash payments to suppliers

Cost of goods sold
Add: increase in inventories
Deduct: Increase in accounts payable
Cash payments to suppliers

Cash payments for operating expenses

 Operating expenses, exclusive of depreciation
Cash payments for operating expenses

Cash paid for interest expense

Cash paid for income tax

Equipment:
1) Disposal of equipment: Acc. Depre - Equipment 37,700
Equipment
2) Depreciation expense: Depreciation Expense $24,700
Acc. Depre - Equipment
3) Purchase of new equipment: Equipment (beginning) 378,000
Disposal - 37,700
Equipment (before purchase) 340,300

Purchase of new equipment 152,700

Equipment (ending) 493,000
 INDIRECT METHOD

Cash Flow from Operating Activities

Net Income $103,400
Adjustment to reconcile Net Income:
Depreciation expense $24,700
Gain on Sale of Investment $(5,000)
Decrease in A/R $8,000
Increase in Inventory $(14,000)
Increase in A/P $15,500
$29,200
Net Cash Provided by Operating Activities $132,600

,500-164,500-103,400)

$623,000
$8,000
$631,000

$348,500
$14,000
$(15,500)
$(347,000)
 $75,300
$(75,300)

$(12,000)

$(64,100)

37,700

$24,700
A).
a. In this case, due to the agreement to repurchase the equipment, Habko continues to have control of the asset and therefore
this agreement is a financing transaction and not a sale. Thus, the asset is not removed from the books of Habko. The entri
to record the financing are as follows.

July 1, 2018
Cash $ 40,000
Liability to Enzy Company $ 40,000

b. December 31, 2018

Interest expense $ 1,200
Liability to Enzy Company $ 1,200

c. June 30, 2019

Interest Expense $ 1,200
Liability to Enzy Company $ 1,200

Liability to Enzy Company $ 42,400

Cash $ 42,400

B.)
A) Package A
Telepon $ 397.89 (420/(420+150))x540
Internet Service $ 142.11 (150/(420+150))x540
$ 540

January 15, 2020

Cash $ 108,000
Sales Revenue $ 79,579
Unearned Service Revenue - Internet $ 28,421

Cost of Goods Sold $ 44,000

Inventory $ 44,000
The sale of the Telepon (and gross profit) should be recognized once the Telepons are delivered on
January 15, 2020.
December 31, 2020
Unearned Service Revenue - Internet $ 13,618.42 (for 2-year)
Service Revenue $ 13,618.42
To record revenue for internet service provided in 2020 (11.5 months from Jan 15 - Dec 31)
 ol of the asset and therefore,
e books of Habko. The entries

B) Package B
420 74% Telepon $ 362.07 (420/(420+150+300))x750
150 26% Internet Service $ 129.31 (150/(420+150+300))x750
570 100% Telepon Service Plan $ 258.62 (300/(420+150+300))x750
$ 750
September 1, 2020
Cash $ 75,000
Sales revenue
Unearned Service Revenue - Internet
Unearned Service Revenue - Maintenance

Cost of Goods Sold $ 22,000

Inventory
The sale of the Telepons (and gross profit) should be recognized once. the Telepon
September 1, 2020.
Unearned Service Revenue - Internet $ 2,155
Unearned Service Revenue - Maintenance $ 2,874
Service Revenue
To record revenue for internet service provided in 2020 (4 months from Sep 1 - Dec 31
B
420+150+300))x750 420 48.28%
420+150+300))x750 150 17.24%
420+150+300))x750 300 34.48%
870 100.00%

$ 36,207
$ 12,931
$ 25,862

$ 22,000
ognized once. the Telepons are delivered on
20.
(for 2-year)
(for 3-year)
$ 5,029
onths from Sep 1 - Dec 31)
PART A
(a) Assuming perpetual inventory records are kept in units only, then costs are not computed for e
PERIODIC

Purchases: Q P TOTAL Sales:

Jan-02 Beginning 1,200 ¥ 3.00 ¥ 3,600 Jan-07
Jan-10 Purchase 600 ¥ 3.20 ¥ 1,920 Jan-13
Jan-18 Purchase 1,000 ¥ 3.30 ¥ 3,300 Jan-18
Jan-23 Purchase 1,300 ¥ 3.40 ¥ 4,420 Jan-20
Jan-28 Purchase 1,600 ¥ 3.50 ¥ 5,600 Jan-26
COGAS 5,700 ¥ 18,840 Jan-31

Ending Inventory 1,500 (Units Avail for Sale - Units Sold)

1) First-in, first-out.
Ending Inventory Q P TOTAL EI
1,500 ¥ 3.50 ¥5,250
COGS ¥ 13,590 (COGAS - EI)
Gross Profit ¥ 8,510 (Sales Revenue - COGS)

2) Average cost.
Ending Inventory Q P TOTAL EI (Price = Weighted Average Cost per
1,500 ¥ 3.31 ¥4,957.89
COGS ¥ 13,882.11 (COGAS - EI)
Gross Profit ¥ 8,217.89 (Sales Revenue - COGS)

(b)
Assuming perpetual inventory records are kept in yen, then costs are computed for each withdra

Under FIFO—Yes. The amount shown as ending inventory would be the same as in (a) above. In each case the units on
hand would be assumed to be part of those purchased on Jan. 28.
Under Average Cost—No. A new average cost would be computed each time a withdrawal was made instead of only onc
for all items purchased during the year.

The calculations to determine the inventory on this basis are given below.

1) FIFO Perpetual
Purchase Cost of Goods
Date Transaction
Q P Total Q
Jan-02 Beginning balance
Jan-07 Sales 700
Jan-10 Purchase 600 ¥ 3.20 ¥ 1,920

Jan-13 Sales 500

Jan-18 Purchase 1,000 ¥ 3.30 ¥ 3,300
 Sales Return (200)

Jan-20 Sales 200

600
300
Jan-23 Purchase 1,300 ¥ 3.40 ¥ 4,420

Jan-26 Sales 700

100
28-Jan Purchase 1,600 ¥ 3.50 ¥ 5,600

31-Jan Sales 1,200

100
TOTAL COGS
Ending Inventory ¥ 5,250
COGS ¥ 13,590
Gross Profit ¥ 8,510

2) Moving Average
Purchase Cost of Goods
Date Transaction
Q P Total Q
Jan-02 Beginning balance
Jan-07 Sales 700
Jan-10 Purchase 600 ¥ 3.20 ¥ 1,920
Jan-13 Sales 500
Jan-18 Purchase 1,000 ¥ 3.30 ¥ 3,300
Sales Return (200)
Jan-20 Sales 1,100
Jan-23 Purchase 1,300 ¥ 3.40 ¥ 4,420
Jan-26 Sales 800
Jan-28 Purchase 1,600 ¥ 3.50 ¥ 5,600
Jan-31 Sales 1,300
TOTAL COGS
Ending Inventory ¥ 5,144
COGS ¥ 13,696
Gross Profit ¥ 8,404
 PART B
ly, then costs are not computed for each withdrawal -> Product Cost
DIC P Rp 30,500
Q Rp 42,000
Q P TOTAL R Rp 22,700
Sales ¥ 700 ¥ 5.20 ¥ 3,640
Sales ¥ 500 ¥ 5.30 ¥ 2,650 JOURNAL:
Sales Return ¥ (200) ¥ 5.30 ¥ (1,060) Loss due to decline of inventory to NRV
Sales ¥ 1,100 ¥ 5.10 ¥ 5,610 Allowance to reduce inventory to N
Sales ¥ 800 ¥ 5.30 ¥ 4,240
Sales ¥ 1,300 ¥ 5.40 ¥ 7,020
Sold ¥ 4,200 ¥ 22,100

(Price = Weighted Average Cost per unit) -> COGAS/units available for sale

costs are computed for each withdrawal -> PERPETUAL

in (a) above. In each case the units on

on Jan. 28.
hdrawal was made instead of only once

Cost of Goods Inventory

P Total Q P Total
1,200 ¥ 3.00 ¥ 3,600
¥ 3.00 ¥ 2,100 500 ¥ 3.00 ¥ 1,500
500 ¥ 3.00 ¥ 1,500
600 ¥ 3.20 ¥ 1,920
¥ 3.00 ¥ 1,500 600 ¥ 3.20 ¥ 1,920
200 ¥ 3.00 ¥ 600
 ¥ 3.00 ¥ (600) 600 ¥ 3.20 ¥ 1,920
1,000 ¥ 3.30 ¥ 3,300
¥ 3.00 ¥ 600 700 ¥ 3.30 ¥ 2,310
¥ 3.20 ¥ 1,920
¥ 3.30 ¥ 990
700 ¥ 3.30 ¥ 2,310
1,300 ¥ 3.40 ¥ 4,420
¥ 3.30 ¥ 2,310 1,200 ¥ 3.40 ¥ 4,080
¥ 3.40 ¥ 340
1,200 ¥ 3.40 ¥ 4,080
1,600 ¥ 3.50 ¥ 5,600
¥ 3.40 ¥ 4,080 1,500 ¥ 3.50 ¥ 5,250
¥ 3.50 ¥ 350
TOTAL COGS ¥ 13,590 TOTAL EI

Cost of Goods Inventory

P Total Q P Total
1,200 ¥ 3.00 ¥ 3,600
¥ 3.00 ¥ 2,100 500 ¥ 3.00 ¥ 1,500
1,100 ¥ 3.11 ¥ 3,420
¥ 3.11 ¥ 1,555 600 ¥ 3.11 ¥ 1,865

1,800 ¥ 3.22 ¥ 5,787

¥ 3.11 ¥ (622)
¥ 3.22 ¥ 3,537 700 ¥ 3.22 ¥ 2,251
2,000 ¥ 3.34 ¥ 6,671
¥ 3.34 ¥ 2,668 1,200 ¥ 3.34 ¥ 4,002
2,800 ¥ 3.43 ¥ 9,602
¥ 3.43 ¥ 4,458 1,500 ¥ 3.43 ¥ 5,144
TOTAL COGS ¥ 13,696 TOTAL EI
 NRV Ending inventory using LCNRV Impair? Total Impairment
Rp 30,600 Rp 30,500 NO Rp -
Rp 40,000 Rp 40,000 YES Rp 2,000
Rp 22,300 Rp 22,300 YES Rp 400
EI as of July 31 Rp 92,800 Rp 2,400

ntory to NRV Rp 2,400

wance to reduce inventory to NRV Rp 2,400
(Allowance Method)