Question Booklet - Sunway College

Canadian International Matriculation Programme
Sunway College
FINANCIAL ACCOUNTING PRINCIPLES
(BAT4M)
FINAL EXAMINATION
Date: 22 November 2011
Time: 8:30 a.m. – 10:30 a.m.
Length: 2 hours
Lecturer: Ms Rehnu Marimuthu
Please read the following instructions carefully before you begin the examination:
1. This exam paper has 8 printed pages (including cover page).
2. The examination is worth 30% of your final mark.
3. The examination consists of two parts.
PARTS CONTENT MARKS
A Multiple Choice Questions
20
(Knowledge & Understanding)
B Thinking, Problem Solving,
80
Knowledge & Understanding
Total 100
4. Answer Part A on the MCQ answer sheet provided. Part B should be answered in the answer
booklet provided. Please hand in the MCQ answer sheet, answer booklet and exam paper before
leaving the examination hall. Ensure that you write your name on the answer sheet and the answer
booklet.
5. Answers must be written in standard English format for an academic audience.
6. Only paper-based dictionaries are permitted.
7. Answers must be written in black or blue pen only.

PART A: MULTIPLE CHOICE QUESTIONS (K/U)
-----------------------------------
Please shade the correct answer on the answer sheet provided.
(20 Marks)

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PART B: THINKING, PROBLEM SOLVING, KNOWLEDGE & UNDERSTANDING
-----------------------------------
Question 1
Basem operates Sweetie Boy Company. The trial balance of Sweetie Boy Company has the
following accounts at its year-end, December 31, 2009:
($)
Accounts Payable 48,500
Accounts Receivable 32,350
Accumulated Depreciation – Building 23,600
Accumulated Depreciation – Office Equipment 11,000
Advertising Expense 15,930
Allowance for Doubtful Accounts 350
Bank 25,500
Basem, Capital 113,000
Basem, Drawings 9,000
Building 102,640
Interest Expense 5,880
Interest Revenue 7,056
Merchandise Inventory 17,100
Office Equipment 71,640
Prepaid Insurance 5,700
Purchases 428,820
Purchase Discounts 15,700
Purchase Returns and Allowances 12,300
Salaries Expense 43,200
Sales 542,194
Sales Discounts 2,500
Sales Returns and Allowances 7,190
Utilities Expense 6,250
Adjusting data:
1. The annual depreciation is $1,740 on the building and $4,400 on the office equipment.
2. Insurance policy is for 1 year, dated October 1, 2009.
3. Salaries of $1,840 are accrued at December 31, 2009.
4. Sweetie Boy Company estimates its bad debts expense to be 4% of accounts
receivable.

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Other additional information:
1. Merchandise inventory on December 31, 2009, is $22,220.
2. Salaries expense is 50% selling and 50% administrative.
3. Insurance expense is 60% selling and 40% administrative.
4. Depreciation on building, depreciation on office equipment and utilities expense are
administrative expenses.
5. Advertising expense is a selling expense.
6. Sweetie Boy Company uses a periodic inventory system.
Instructions:
a) Prepare the adjusting entries for the ended 31 December 2009. (Narration not
required).
(5 marks)
b) Prepare the multiple-step income statement and owner equity’s statement for the year
ended 31 December 2009 and a classified balance sheet as at 31 December 2009.
(29 marks)
Question 2
On December 1, the accounts receivable control account balance in the general ledger of the
Bernard Dental Store was $9,000. The accounts receivable subsidiary ledger contained the
following detailed customer balances: Sakib $1,500, Ting $2,100, Hutomo $2,600, and Jeet
$2,800. The following information is available from the company's special journals for the
month of December:
Cash Receipts Journal: Cash received from Hutomo $1,900, from Sakib $1,600, from Sung
$1,700, and from Ting $1,800.
Sales Journal: Sales to Sung $4,300, to Hutomo $1,700, to Sakib $2,300, and to Jeet $2,400.
Additionally, Hutomo returned defective merchandise for credit for $900. Sakib returned
defective merchandise for $600 which he had purchased for cash.
Instructions:
a) Post the above transactions to the appropriate control and subsidiary ledgers.
(10 marks)
b) Determine whether the subsidiary ledgers agree with the control account.
c) List down two advantages of subsidiary ledgers.
(4 marks)
(1 marks)

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Question 3
Baby Yang Corporation’s fiscal year is on 31 August. In 2008, Baby Yang Corporation sold
three of its assets and the information concerning the assets is summarized below:
Asset Cost Purchase
Date
Useful
Life
Salvage
Value
Depreciation
Method
Disposal
Date
Disposal
Amount
Equipment $150,000 1/6/2005 5 $25,000 Straight line 31/5/2008 $55,000
Delivery $120,000 1/5/2006 6 $6,500 Units-ofactivity
31/5/2008 $38,000
Truck
Machinery $120,000 1/7/2006 8 $10,000 Declining
balance
30/11/2007 $100,000
For the declining balance method, the company uses the double-declining rate. For the unitsof-activity
method, total miles are expected to be 500,000. Actual miles of use in the first
three years were: 2006: 25,000; 2007: 145,000; and 2008: 105,000.
Instructions:
a) Compute the amount of depreciation expense for the three assets above for each year
to the date of disposal using the given method. (All answers rounded to nearest
dollar).
(8 marks)
b) Prepare the adjusting entries for depreciation for 2008 and the journal entries for the
sale of each asset.
(9 marks)

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Question 4
The stockholders’ equity accounts of Cherris Corporation on January 1, 2008, were as
follows:
Common Stock, $5 par value, 500,000 shares
authorized, 200,000 shares issued
and outstanding $1,000,000
Paid-in Capital in Excess of Par Value 200,000
Retained Earnings 840,000
During the year, the following transactions occurred:
January 15 Issued 3,000 shares of common stock for $25,500.
17 Declared a $1 cash dividend per share to stockholders of
record on January 31, payable February 15.
February 15 Paid the dividend declared in January.
April 15 Declared a 10% stock dividend to stockholders of record on
April 30, distributable May 15. On April 15, the market
price of the stock was $15 per share.
May 15 Issued the shares for the stock dividend.
July 1 Announced a 2-for-1 stock split. The market price per share
prior to the announcement was $17.
20 Purchased 15,000 shares of common treasury stock at $8 per share.
September 3 Sold 4,000 shares of treasury stock – common for $36,000.
December 1 Declared a $0.50 per share cash dividend to stockholders of
record on December 15, payable January 10, 2009.
31 Determined the net income for the year was $350,000.
Instructions:
a) Journalize the above transactions.
b) List down one advantage and one disadvantage of a corporation.
(13 marks)
(1 marks)