Chapter 5 EOC assignment (ACC2001, 2019 2020 SE1, x, 44k6 1)

FINANCIAL ACCOUNTING: TOOLS FOR DECISION-MAKING, 7th Canadian Edition Kimmel P.D... September 28Debit Sales Returns and Allowances $10,000 Credit account receivable $10,000... FINANCIAL

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FINANCIAL ACCOUNTING: TOOLS FOR DECISION-MAKING, 7th Canadian Edition (Kimmel P.D et al., 2017) – CHAPTER 5

BRIEF EXERCISES

BE5-4:

Pocras Corporation

Debit merchandise inventory $32,000

Credit Accounts Payable $32,000

Wydell Inc

Debit cost of goods sold $14,400

Credit merchandise inventory $14,400

Debit Merchandise Inventory (180 x 16) = $2,880

Credit Accounts Payable $2,880

June 3

Debit Accounts Receivable (220 x 25) = $5,500

Credit Sales $5,500

Debit Cost of Goods Sold (220 x 17) = $3,740

Credit Merchandise Inventory $3,740

June 5

Debit Accounts Payable $160

Credit Merchandise Inventory $160

June 8

Debit Accounts Receivable (80 x 22) = $1,760

Credit Sales $1,760

Debit Cost of Goods Sold (80 x 17) = $1,360

Credit Merchandise Inventory $1,360

June 9

Debit Sales Returns and Allowances $264

Credit Accounts Receivable $264

June 11

Debit Merchandise Inventory (130 x 15) = $1,950

Credit Accounts Payable $1,950

June 12

Debit Cash (5,500 – 110) = $5,390

Debit Sales Discounts (5,500 x 2%) = $110

Credit Accounts Receivable $5,500

June 17

Debit Cash $1,466.08

Debit Sales Discounts (1,760 – 264) x 2% = $29.92

Credit Accounts Receivable (1,760 – 264) = $1,496

June 22

Debit Accounts Receivable (125 x 25) = $3,125

Credit Sales $3,125

Debit Cost of Goods Sold (125 x 17) = $2,125

Credit Merchandise Inventory $2,125

June 25

Debit Sales Returns and Allowances $375

Credit Accounts Receivable $375

Debit Merchandise Inventory (15 x 17 ) = $255

Credit Cost of Goods Sold $255

Debit sale account 20,000 x 2% = $400

Credit account receivable $20,000

September 28

Debit Sales Returns and Allowances $10,000

Credit account receivable $10,000

Debit Sales Returns and Allowances $85

Credit account receivable $85

Debit Sales Discount ($3,500 × 2%) = $70

Credit Accounts Receivable $3,500

(b) The stakeholders who are harmed are the creditors since they are giving a discount that is

not warranted They are losing their money on the activity they could be earning bygetting paid in good time The company itself is as well harmed since Jamie Caterino hascreated a bad name among the creditors In some cases, the company benefits by keepingtheir money for a long duration of time and still getting the discount

(c) Rita Pelzer should not continue the practice that was initiated by Jamie Caterino This is wrong and she should therefore not put herself in that state just because somebody told her

to do it that way She does have a choice in the issue since always have a choice in how they conduct themselves She could have gone above Jamie Caterino and report what she was told to do If they tell her to continue with the practice as well, she cansnub them or search for another job She should not make herself responsible for immoral behavior under any circumstances

FINANCIAL ACCOUNTING: TOOLS FOR DECISION-MAKING, 7th Canadian Edition (Kimmel P.D et al., 2017) – CHAPTER 10

QUESTIONS

Q4:

Accounting for the Sale of Gift Certificates

The sale of a gift certificate should be recorded with a debit to Cash and a credit to a liability account such as Gift Certificates Outstanding

Note that revenue is not recorded at this point Rather, the retailer is recording its

obligation/liability to provide merchandise or services for the amount of the certificate sold

Accounting for the Redemption of a Gift Certificate

When a gift certificate is presented to the retailer, revenue will be recorded by the retailer for the amount of merchandise or services that were provided This is done with a debit to the liability account Gift Certificates Outstanding and a credit to a revenue account

Q6:

Non-current portion of debt that a company owns Think of this as a component of what a company has for debt that is not a short-term obligation

A company's total debt can be divided into two parts, the current portion of all its debt

obligations and the long term portion of all its debt obligations These items are often found on a company's balance sheet In this case here, this line item is the non-current portion of its debt

Q11:

IAS 1, Presentation of Financial Statements, paragraph 60 stipulates that an entity should presentcurrent and non-current liabilities as separate classifications in its statement of financial position,except when a presentation based on liquidity provides more relevant and reliable information Whatever the method of presentation, an entity should disclose the amount expected to be settledafter more than 12 months and less than 12 months

BRIEF EXERCISES

BE10-2:

(a) April 30 Property Tax Expense ($36,000÷12 x 4) 12,000

Property Tax Expense ($36,000 ÷12 x 2.5) 7,500

Prepaid Property Tax ($36,000 ÷12 x 5.5) 16,500

BE10-4

b) Aug 1 Interest Expense ($60,000 x 5% x 1/12) 250

INTRODUCTION TO FINANCIAL ACCOUNTING (VERSION 2019B) by Dauderis, H

& Annand, D – CHAPTER 9

The electricity and natural gas consumed but the bill has not been received

An emergency repair that occurred but the bill has not been received

Real estate taxes that have occurred but the tax bill has not been received

Worker compensation insurance premiums which have occurred but the bill has not been

INTRODUCTION TO FINANCIAL ACCOUNTING (VERSION 2019B) by Dauderis, H

& Annand, D – CHAPTER 10

INTERMEDIATE FINANCIAL ACCOUNTING - VOLUME 2 (2019 - REVISION A) by Arnold, G & Kyle, S – CHAPTER 12

Debit 352(1): 23.333

Credit 641: 23.333

Debit 641(5): 35.000

Credit 11X (331): 35.000

b Calculate the amount of unearned revenue to be reported at December 31, 2017

Unearned revenue at December 31, 2017 = (70,000 − 23,333 − 23,333) = $23,334

b Calculate the amount of liability to be reported at the end of the current year with respect

to the vacation pay and sick pay

Vacation pay liability at December 31 = $24,720, per part (a)

Sick pay liability at December 31 = $0 (these benefits do not accumulate)