Q1. The accounting standards are set by specific Organizations depends on the country location and regulations. You are asked to answer the following questions:
- What are the developing US Financial Accounting Standards Organizations with each organization responsibilities? Please write one paragraph.(0.5 mark)
- What are the processes of setting a new accounting standard in the USA? Please write one paragraph. (0.5 mark)
Q2. Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.(1.5 marks)
a. Estimated depreciation on office equipment for the year, SAR 2,000
b. The Prepaid Insurance account has a SAR 2,500 debit balance before adjustment. An examination of insurance policies shows SAR 350 of insurance expired
c. The Prepaid Insurance account has a SAR 1,400 debit balance before adjustment. An examination of insurance policies shows SAR 400 of unexpired insurance
d. The company has three office employees who each earn SAR200 per day for a five-day workweek that ends on Friday. The employees were paid on Friday, December 26 and have worked full days on Monday, Tuesday and Wednesday, December 29, 30 and 31
e. On November 1, the company received 6 months’ rent in advance from a tenant whose rent is SAR 600 per month. The SAR 3,600 was credited to the Unearned Rent account
f. The company collects rent monthly from its tenants. One tenant whose rent is SAR 650 per month has not paid his rent for December
Q3. The following trial balance was taken from the books of Eid Corporation on December 31, 2020.
AccountDebitCredit
CashSAR12,000
Accounts Receivable40,000
Note Receivable7,000
Allowance for Doubtful AccountsSAR1,800
Merchandise Inventory44,000
Prepaid Insurance4,800
Furniture and Equipment125,000
Accumulated Depreciation–F. & E.15,000
Accounts Payable10,800
Share Capital–Ordinary44,000
Retained Earnings55,000
Sales 280,000
Cost of Goods Sold111,000
Salaries Expense50,000
Rent Expense12,800
TotalsSAR406,600SAR406,600
Required:
- Prepare the necessary closing entries. (1 mark )
Q4.
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Presented below are a number of statement of financial position items for ABC, Inc., for the current year, 2020. |
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|
Goodwill |
SR 125,000 |
Accumulated Depreciation – Equipment |
SR 292,000 |
|
Payroll Taxes Payable |
177,591 |
Inventories |
239,800 |
|
Bonds Payable |
285,000 |
Rent Payable – Short-term |
45,000 |
|
Cash |
360,000 |
Taxes Payable |
98,362 |
|
Land |
480,000 |
Long-term Rental Obligations |
480,000 |
|
Notes Receivable |
445,700 |
Share Capital – Ordinary, SAR1 Par Value |
200,000 |
|
Notes Payable to Banks |
265,000 |
Share Capital – Preference, SAR10 Par Value |
150,000 |
|
Accounts Payable |
490,000 |
Prepaid Expenses |
87,920 |
|
Retained Earnings |
713,897 |
Equipment |
1,470,000 |
|
Income Taxes Receivable |
97,630 |
Trading Securities |
121,000 |
|
Unsecured Notes Payable (Long-term) |
1,600,000 |
Accumulated Depreciation – Building |
270,200 |
|
Building |
1,640,000 |
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Prepare a classified statement of financial position in good form as per IFRS. (1.5 marks)
Assume that notes receivable and notes payable are short-term, unless stated otherwise. Cost and fair value of trading securities are the same
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