Accounting Answers

Q1.A Bosh Company’s total assets are $155,000 and its total liabilities are $85,000. What is the

amount of the Bosh company’s retained earnings if its capital stock amounts $50,000? 3

Q2. Wiley Company had total revenue of $300,000 for a recent month. During the month the

company incurred operating expenses of $205,000 and purchased land for $55,000. Compute the

amount of Wiley’s net income for the month.

The partners share profits and losses in the ratio of 4:2:4. On July 1, 2010, Diaz asked to be allowed to  withdraw from the partnership. The partners decided to close the books as of these date so as to  determine the capital interest of Diaz. Profit for 6 months ended amounted P60,000 while drawings of  Dy, David and Diaz amount to P6,000 , P8,000 and P4,000, respectively. Profits and losses are to be  shared equally after the retirement of Diaz. 

1. What are the journal entries to be prepared for the retirement of Diaz? 

3. Assumption: If Diaz decided to sale his interest to Taki for P150,000.00 what is the journal entry  for the sale of interest? 

4. Assuming the Sale of interest to the continuing partners. Diaz sold his interest to Dy and David  for P90,000; the interest being divided equally by the remaining partners. Profits and losses  after the retirement of Diaz will be divided equally, what is the journal entry for the sale of  interest?

The bank is requiring a debt-to-equity rate of 0.75. what is the maximum additional amount will be able to borrow

Trial balance of GM as at 31 Dec 2021 Debit(RM) Credit(RM)

Sales 126,500

Purchases 99,850

Premises (cost) 100,000

Accum. depreciation at 1 Jan. 2021_Premises 25,000

Plant (cost) 18,000

Accum. depreciation at 1 Jan. 2021_Plant 2,300

Wages & salaries 8,900

Rent expense 7,500

Opening Inventories at 1 Jan. 2021 5,000

Capital at 1 Jan. 2021 80,000

Drawings 25,000

Carriage inwards 4,000

Account receivables & Account payables 27,500 16,000

Bad debts written off 5,000

Other revenue 2,000

Cash at bank 18,950

Bank loan 30,000

300,750 300,750

Add'l info at 31 Dec 2021:

i.Wages and salaries accrued amount to RM700.

ii. Rent prepaid amounts to RM300.

iii. Bank loan interest of 10 per cent per annum is outstanding.

iv. Provision for doubtful debt for account receivables of 2 per cent is to be made.

v.  Depreciation to be charged at 2 per cent of cost on the premises and 10 per cent of cost on the plant.

vi.Closing inventories RM12,500

prepare Statement of Financial Position as at 31 December 2021

Trial balance of GM as at 31 Dec 2021 Debit(RM) Credit(RM)

Sales 126,500

Purchases 99,850

Premises (cost) 100,000

Accum. depreciation at 1 Jan. 2021_Premises 25,000

Plant (cost) 18,000

Accum. depreciation at 1 Jan. 2021_Plant 2,300

Wages & salaries 8,900

Rent expense 7,500

Opening Inventories at 1 Jan. 2021 5,000

Capital at 1 Jan. 2021 80,000

Drawings 25,000

Carriage inwards 4,000

Account receivables & Account payables 27,500 16,000

Bad debts written off 5,000

Other revenue 2,000

Cash at bank 18,950

Bank loan 30,000

300,750 300,750

Add'l info at 31 Dec 2021:

i.Wages and salaries accrued amount to RM700.

ii. Rent prepaid amounts to RM300.

iii. Bank loan interest of 10 per cent per annum is outstanding.

iv. Provision for doubtful debt for account receivables of 2 per cent is to be made.

v.  Depreciation to be charged at 2 per cent of cost on the premises and 10 per cent of cost on the plant.

vi.Closing inventories RM12,500

prepare Statement of Comprehensive Income for the year ended 31 Dec 2021

Trial balance of GM as at 31 Dec 2021 Debit(RM) Credit(RM)

Sales 126,500

Purchases 99,850

Premises (cost) 100,000

Accum. depreciation at 1 Jan. 2021_Premises 25,000

Plant (cost) 18,000

Accum. depreciation at 1 Jan. 2021_Plant 2,300

Wages & salaries 8,900

Rent expense 7,500

Opening Inventories 1 Jan. 2021 5,000

Closing inventories 12,500.

Capital at 1 Jan. 2021 80,000

Drawings 25,000

Carriage inwards 4,000

Account receivables & Account payables 27,500 16,000

Bad debts written off 5,000

Other revenue 2,000

Cash at bank 18,950

Bank loan 30,000

300,750 300,750

Add'l info at 31 Dec 2021:

i.Wages and salaries accrued amount to RM700.

ii. Rent prepaid amounts to RM300.

iii. Bank loan interest of 10 per cent per annum is outstanding.

iv. Provision for doubtful debt for account receivables of 2 per cent is to be made.

v.  Depreciation is to be charged at 2 per cent of cost on the premises and 10 per cent of cost on the plant.

prepare Statement of Comprehensive Income for the year ended 31 December 2021

Twatalika acquired a new property (land and buildings) in Kaoma, on 1 January 2018 for K40 million (including K15 million in respect of the land). The asset was revalued on 31 December 2019 to K43 million (including K16.6 million in respect of the land). The building’s element will be depreciated over a 50-year useful life with a residual value of nil. The useful life and residual value did not subsequently need revision. On 31 December 2020, the property was revalued downwards to a fair value of K35 million as a result of the recession (including K14 million in respect of the land). The company makes the annual transfers from revaluation surplus to retained earnings in respect of excess depreciation, as allowed by IAS 16 Property, Plant, and Equipment. Calculate the amounts that must be reported in the profit or loss and other comprehensive income in respect of the building for the years ended 31 December 2019 and 31 December 2020.

AIT construction Company is into the establishment of theater halls for cinematograph is considering purchasing equipment that costs Ghc23,000. The equipment has an estimated useful life of 5 years and no salvage value. B Company believes that the annual cash inflows from using the equipment will be Ghc65,000.

Required:

i. Calculate the net present value of the equipment assuming that B Company's cost of capital is 10%. Is the equipment an acceptable investment?

ii. Calculate the net present value of the equipment assuming that B Company's cost of capital is 12%. Is the equipment an acceptable investment?

iii. Explain the use of payback period and what are the flaws of the method as compared to NPV method of evaluating cash flows.

A, B and C are in a partnership sharing profit ratio is 5:3:2. The statement of financial position of the partnership 1 january is as follow: ASESETS Property 190 000 Plant and Equipment 85 000 Current assets 15 000 CAPITAL Capital A 40 000 Capital B 120 000 Capital C 80 000 Current account A 5 000 Current account B (10 000) Current account C 20 000 Replacement reserve 20 000 General reserve 15 000. On 1 january 2019 C decided to retire under the following conditions. 1. The propery has to be re-valued up to 200 000. 2. Goodwill is estimated at 50 000, but should not be recorded in the books of the new partnership. 3. All reserves must be writte back. 4. The new profit sharing ratio for A and B is 1:1. 5. C will receive 10 000 cash and the rest should be converted to a loan. Required: prepare the capital accounts in column format to display the above.

Ordinary shareowners invested cash $35,000, accounts receivable $10,000 and supplies $15,000 in the Company. write the journal entry for this transaction