Q1. Differentiate Cash basis vs. accrual basis of accounting.
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Q2. Presented below are selected accounts of Aramco Company at December 31, 2010.
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FinishedGoods
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SAR 52,000
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Cost of GoodsSold
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SAR 2,100,000
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Revenue Received in Advance
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90,000
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Notes Receivable
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40,000
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Equipment
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253,000
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AccountsReceivable
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161,000
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Work-in-Process
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34,000
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RawMaterials
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187,000
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Cash
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42,000
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Supplies Expense
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60,000
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Trading Securities
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29,000
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Allowance for DoubtfulAccounts
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12,000
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Customer Advances
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36,000
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Licenses
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18,000
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Cash Restricted for Plant Expansion
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50,000
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Share Premium - Ordinary
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88,000
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Treasury Stock
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22,000
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a. The notes receivables are due April 30, 2012, with interes treceivable every April 30. The notes bear 6% interest (Hint: Accrue interest due on December 31, 2010.)
Instructions:
Prepare the currentassets section of AramisCompany'sDecember 31, 2010, statement of financial position, with appropriate disclosures.
Q3. Record the following transactions of Reed Co. in the desiredmanner and give the adjusting entry on December 31, 2010. (Two entries for each part.)
1. An insurancepolicy for twoyearswasacquired on April 1, 2010 for $8,000.
2. Rent of $12,000 for six months for a portion of the building was received on November 1, 2010.
Q4. Prepare a statement of cash flows of Stanislaus Co. for the year ending December 31, 2012
December 31
2011 2012
Land € 58,800 € 21,000
Equipment................................................ 504,000 789,600
Inventory................................................. 168,000 201,600
Accounts receivable (net)........................ 84,000 151,200
Cash......................................................... 42,000 63,000
TOTAL........................................ €856,800 €1,226,400
Share capital-ordinary............................. €420,000 € 487,200
Retained earnings.................................... 67,200 205,800
Notes payable - Long-term...................... 168,000 302,400
Notes payable - Short-term...................... 67,200 29,400
Accounts payable..................................... 50,400 86,000
Accumulated depreciation....................... 84,000 115,600
TOTAL........................................ €856,800 €1,226,400
Additional data for 2012:
1. Net income was €235,200.
2. Depreciation was €31,600.
3. Land was sold at its original cost.
4. Dividends of €96,600 were paid.
5. Equipment was purchased for €84,000 cash.
6. A long-term note for €201,600 was used to pay for an equipment purchase.
7. Share capital-ordinary was issued to pay a €67,200 long-term note payable.