Huawei p9 vs p8 9 notes receivable journal entries 10

Installing airbags as an added safety factor for the delivery van driver. Customer's post-dated check Cash in bank per books bal.

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D 64, 16, P24, E 4. Carrying amount Gain on sale 1, 1, B D 1,A 1, 1,1, 1,Chapter China smartphones online shopping B 91 Chapter Acquisition on Nov 4 Total cost of the land Question No.

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Share in your Facebook group Copy. Additional development cost - Remaining depletable cost Divide by: B 3, 1, C 4.

Discounting Notes Receivable

In this way you can check your understanding of these questions before the tutorial class. What management functions does it assist? Which method would you be inclined to use, and why? C Chapter Inventories And on the next year January 5when the claim was filed and acknowledged by the common carrier, the journal entry will be:

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14.03.2018 - C 9, 3, 4. Balance as per bank statement Less: Ten most common ethical problems cont. Sales discount Net Sales Question No.

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07.03.2018 - Cost concepts and classification — — c. Internal control is fundamental to running a successful business. A PP 6, 1, 7, 7, 26, P19, 4. From third purchase 15 x 60 From second purchase 5 x 54 Total inventoriable cost P 1, A 87 Chapter Introduction Last week we discussed the importance of the balance sheet and income statement to managers. As the collision case also showed, once people equate their own interests with another party's, they interpret data to favor that party.

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02.03.2018 - Net investment income - see No. Investment in Associate Over or under valued asset: Present Interest Principal value factor collections 0. Use the information given above to answer the following 2 questions. B P, P 50,

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16.03.2018 - Cost data, once classified and recorded, recorded can be used for any purpose. But at that point, correcting the bias may require admitting prior errors. Solution will be provided on blackboard at the beginning of Stuvac, Please complete the on on-line line student evaluations of the course it is vitally important we receive this feedback. We will also look at the ethical considerations of being an accountant.

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Checks paid by the bank Bank debits except serv. Total Collections from customers on Dec. Checks issued this month Book disbursements Less: Paid out in currency Less: September 30 October 31 Outstanding checks: September 30 October 31 Paid out in currency Adjusted balances Sept.

September 30 October 31 Bank service charge: September 30 October 31 Adjusted balances 8, Disb. A 2, 97, 4. A 6, 13, 2, 1, , 1, , Chapter 8: Outstanding checks, beg P, Add: Checks issued this month Book Credits P3,, Less: Checks paid by the bank Bank Debits P2,, Less: November 30 December 31 Outstanding check: Cash and Cash Equivalents Unadjusted book balance Bank service charge: Deposit made by the co.

Deposits acknowledged by the bank Bank Credits P1,, Less: Erroneous bank charge 20, Outstanding checks, end Question No. Cash and Cash Equivalents Question Nos.

This is an unrecorded disbursement for fund transfer. Deposit in transit Less: Outstanding checks Adjusted cash in bank balance, December 31 Less: Credit memo December Add: November 30 December 31 Bank service charge-Dec.

P 40, 4, 30, P 74, P 5,, 74, , P5,, C 5. Outstanding check, beg Add: Checks paid by the bank Bank Debits P, Less: November 30 December 31 Error correction NSF check, no entry on the books when returned and redeposited Adjusted balance Question No 3 Unadjusted disbursement, per bank Outstanding checks November 30 December 31 Error correction NSF check, no entry on the books on the returned and redeposit Adjusted balance P, 11, 20, 40, P, P, 7, 21, 40, P 87, Question No 4 Unadjusted bank bal.

P, 20, 21, P, Question No 5 Zero, adjusted bank and book balance on December 31 is the same. Cash and Cash Equivalents Adjusted bal. Undeposited receipts Adjusted bank balance A P, 39, Credit memo for notes collection Credit memo for int.

Balance cash accountability P, Cash in bank bal. B 42 1, 2, , Chapter 8: Credit memo proceeds clean draft Debit memo for bank service charge Balance cash accountability P 46, P 47, Question No.

Cash accounted Cash in bank bal. Undeposited collection, June 30 Cash that should be on hand on July 15 Less: Deposit in transit No. P, , , 60, P, Question No. Credit memo for note coll. Unreleased check Company's post-dated check Total Less: Customer's post-dated check Cash in bank per books bal.

Cash and Cash Equivalents Purchases Less: Proceeds of issuance of stocks Collection from customers Loan proceeds Disbursements: Payment of real property Payment of furniture and equipment 7,, Payment of AP Payment of operating expenses Cash accountability P 80, 59, 28, P 50, 5, 69, 15, Question No.

Outstanding checks Undeposited collections Adjusted cash in bank bal. A P, P 6, 1, 7, 7, 26, P19, 4. Accrued interest, Carrying amount of receivable: Illustration On July 1, , Boy Co.

Loans and Receivables 9 Adjusted bal. C, , 2. Invoice price of merchandise returned Net invoice price Less: Loans and Receivables Add: Accounts written off for — Accounts written off for — 80, , The accounts Receivable as of December 31, is as follows: From 1,, From 1,, 2,, Credit Sales 2,, 1,, 2,, 6,, 2,, 8,, 2,, 10,, The year-end balances of accounts Receivable are as follows: December 31, 1,, December 31, 1,, CASE 1 Accounts written off 20, 40, , , 22, , , , Recoveries 15, 20, 5, 40, 20, 60, 40, , Question No.

Loans and Receivables Total years from to A 19, 81, 40, , Case 2 4. Balance 1,, x 1. Allowance for doubtful accounts, end Net Realizable Value Beg. Carrying amount of machinery Cost, Less: The selling price is equal to the face amount, which is likewise equal to the present value of the note since the note bears an annual interest rate that is similar with the market rate.

The principal amount is collectible beyond one year from the reporting date and thus, reported as non-current. The entire principal amount of notes receivable is treated as noncurrent asset since it is collectible beyond one year from the reporting date.

Journal entries are as follows: Carrying amount of machinery Cost 1,, Less: Accumulated depreciation, , Gain on sale P1,, Question Nos. Choices for question No. Carrying amount of machinery Cost Less: See amortization table above.

Problem Principal is due in equal annual payments, starting December 31, Principal is due in equal annual payments, starting December 31, Present Interest Principal value factor collections 0.

Loans and Receivables Question No. A 1,, , , 4. Accumulated depreciation Gain on sale Question Nos. A, , , 4. Based on the original data Requirement No. Loan receivable principal amount Less: Unearned interest income Origination fee received, Less: Accrued interest receivable 1,, 17,, Less: Accrued interest receivable, 1,, Less: PV factor Principal Total collections 0.

B 58 Carrying amount, , , - Chapter Would have been present value if there was no impairment Lower Less: Actual amortized cost Gain on reversal of impairment loss Question No. Principal amount borrowed Less: Principal payment Remittance Less: Carrying amount of accounts receivable, — 12, Loss on factoring Suggested answer: B 60 P, , P 22, Chapter Carrying amount on date of discounting Principal Add: The amount of loss to be recognized is computed in a similar way as to that of discounted note without recourse.

The amount of interest expense is computed in a similar way as to that of discounted note without recourse or conditional sale. P, 5, P, C 5. P, 30, P, C Chapter Balance DA expense 7.

Balance DA expense squeeze Question No. Balance Sales 2,, 7,, 2,, , 7,, 62 Balance end Write-off Collections squeeze Chapter Correct doubtful account expense see No. Balance Sales on account, 3,, , 62, 2,, Total 3,, 3,, Balance end Write-off Collections excluding advance from customers Question No.

Balance Doubtful accounts expense Recoveries Chapter Loans and Receivables 1. A Recoveries 5, 5, 9, 20, 10, 30, Accounts written off minus Recoveries Total credit sales Total years from to Balance Doubtful account expense squeeze Recoveries Chapter Accounts Receivable, 30, 4.

B Allow for DA 3, 5. Inventory, Net Sales 1,, 30, 24, Cost of Sales, 24, 40, 40, 32, 50, 32, 50, 40, , 12, 15, , Question No. Adjusted net sales Total Less: Collections, net of discounts Estimated uncollectible accounts charged to AR in Dec.

Unadjusted accounts receivable, Dec. Loans and Receivables Subsidiary ledger balance, Dec. AR controlling account, Dec. Estimated uncollectible account charged to AR in Dec. Adjusted accounts receivable in Dec.

Loans and Receivables 6 7 36, 1, 62, Question No. B 1, Chapter Allowance for doubtful accounts, beginning Doubtful accounts expense 68 P 7, Loans and Receivables Question Nos.

Accrued interest income P P D 5. Balance Recovery Doubtful accounts expense squeeze Question No. Bad debts rate Net credit sales Add: Sales return Unadjusted accounts receivable, Dec. Balance end Write-off Sales return Collections including recoveries C 4,, , , 3,, Question No.

Present value of Prin. B Carrying value 3. D Carrying amount 8,, 8,, 8,, 8,, Chapter Balance, , , 75, 45, 30, Reduction to Principal A P1,, 1,, 1,, 5. D 77, 54, 22, 4. Carrying amount 3,, 3,, 3,, 3,, 3,, 4,, A 4,, 11, , 3,, Question Nos.

Allowance for doubtful accounts, end see no. Balance Recoveries Doubtful account expense Chapter Accounts receivable assigned Total Less: T-Account of Allowance for bad debts: The audit adjustments did not result to any changes to inventory account.

Balance Recoveries Adjustment to Doubtful account expense squeeze Accounts Allowance for doubtful accounts Accounts receivable Debit 50, Sales return Accounts receivable 40, 3 Claim from insurance Accounts receivable 55, 4 Sales discount Accounts receivable 4, 2 Credit 50, 40, 55, 4, 78 Chapter The accounts receivable account was incorrectly footed.

The unadjusted balance should have been P2,, instead of P2,, Allowance for bad debts Net realizable value 2,, , P 2,, Question Nos. Balance Recoveries Doubtful account expense 4. D 80 Amortization 45, 50, 56, 63, 71, 5.

A Carrying amount 3,, 3,, 3,, 3,, 3,, 4,, Chapter Present value of the note, x 2. Present value of the note, x 0. C 82 1,, , 1,, 5. The invoice price is computed by deducting the trade discount of 20 and List Price P, Less: The cash to be paid under the net method is computed as follows: Purchases P 83, Less: Purchase 9, returns Net purchases 76, Less: Purchase 2, discount Cash paid P 73, 2.

Moving Average Method Cost of merchandise sold — Aug. Purchase 9, returns Cash paid P 73, Unit Cost Inventories price of P3, Total cost of merchandise is Items sold FOB destination that are in transit at December 31, at cost Items currently being used for window display Items on counter for sale Items included in the count, damaged and unsalable Items in receiving dept.

Inventories The following items would not be reported as inventory: No, since the inventories were lost in transit and it is improper to report inventories that is not existing i.

Thus the journal entry at December 31 if no claim was filed and the common carrier has yet to acknowledge the claim may include a: Inventories And on the next year January 5 , when the claim was filed and acknowledged by the common carrier, the journal entry will be: Claims from common carrier 50, Gain on reimbursement of lost inventory 50, To record the claim against common carrier on January 5.

Use the following guide questions in answering this question: Was there a valid sale? Was the sale recorded? A 86 Sales, 1, 9, 6, 3, 8, , A Inventories, 2, 1, , A Chapter From third purchase 15 x 60 From second purchase 5 x 54 Total inventoriable cost P 1, A 87 Chapter B 91 Chapter Sales returns Net Sales excluding Sales discount Multiply by: Purchase returns Total Goods available for sale Less: Cost of goods sold Merchandise inventory that should be on hand Less: Sales ratio Cost of Sales 1,, D 92 A D Chapter Markdowns Sales Inventory end at retail Multiply: Average Method - Retail Method Computation of cost ratio: Sales Inventory end at retail Multiply: Ending inventory understated 40, 70, , 70, C, B Question Nos.

D, A 1,, 40, 70, , , 1,, C 2,, 2,, , D Chapter D 17, 72, 80, 24, 31, , B, , 4. Goods in transit sold, FOB destination Less: Goods in transit purchased, FOB shipping point Add: Hold for shipping inst.

Accounts Payable and related accounts Was there a valid purchase? Was the purchase recorded? Accounts Receivable and related accounts Was there a valid sale? A 40, , A 4. A 4, 1, 5.

D 64, 16, P24, E 4. D Net Purchases 6. P3,, D 98 5. D 25, P, 5. The effect of errors on December and January has no effect on the ending balance of the accounts payable on December 31, since the payable is expected to be settled before the end of the year.

Beginning inventory — units Add: Total purchases — units Total goods available for sale — units Less: Inventories The 30, ending inventory comes from the last two purchases as follows: Units Unit cost Total cost From 4th quarter purchases 10, 68 , From 3rd quarter purchases 20, 66 1,, Total 30, B 2,, Question No.

Raw materials used see no. Net Purchases P6,, — , Total goods available for sale Less: Ending inventory at cost see no. Loss on inventory write-down see no. Purchases of raw materials Transport inwards of raw materials Total raw materials available for use Less: Inventories Fixed manufacturing overheads are allocated to the products at year end using the normal production unless actual production is higher than normal: Work-in-process completed see no.

Expected selling price Less: Cost to complete Cost to sell Net realizable value Cost: Inventories Normally it is considered to be inappropriate to calculate the net realizable value per classification of inventory, but since the raw materials is to be sold as is, it becomes its own product line and must be evaluated separately.

Lower of cost or NRV see no. T-shirts 9, x P11 Jackets 5, x P15 Add: Merchandise inventory at cost Cost of sales before inventory write-down Add: B, P, 5, P, 5.

This T-Account of Raw Materials will be the same under the three different cases: Gross Profit Divide by: Therefore, the cost of goods sold is computed as follows: Cost Ratio Cost of goods sold Question No.

Direct labor cost Multiply by: Predetermined rate Factory overhead 3,, Balance end Cost of goods manufactured A 1,, 4,, 0. Sales Gross Profit Rate, 2,, 0. Cost Ratio Cost of goods sold 6,, 0.

Balance DM purchased 32, , , , Total, , Balance end squeeze Direct materials used,00 - , Work in process inventory Beg. The beginning balance on January 1, is the ending balance as of December 31, The following corrections should be made to this problem: The ending accounts payable Dec.

Purchase discounts Payments to supplier squeeze Total, 70, 80, 3,, , 3,, , 3,, 3,, Beg. Balance Purchases Freight-in Question No. Balance Net purchases, 2,, , 2,, Total 3,, 3,, Purchases Add: Purchase returns and allow Purchase discounts Net Purchases Balance end Direct materials used 3,, , 3,, 70, 80, 2,, Question No.

Balance Direct materials used Direct labor Factory overhead, 2,, , , , 4,, Total 4,, 4,, Question No. Do not deduct sales discount from the gross sales since sales discount does not constitute actual return of merchandise.

Balance Cost of goods manufactured Finished goods, 4,, , 4,, Balance end Cost of goods sold Chapter Inventories Total 4,, 4,, Estimated finished goods Less: Cost of goods out on consignment Salvage value Inventory fire loss, 20, 10, , Question No.

Balance Cost of goods manufactured, 4,, , 4,, Total 4,, 4,, Estimated finished goods Less: B Balance end Cost of goods sold, 20, 10, , 5. Unrecorded obligation — April 25 April Shipments Less: The P22, of purchase return should not be deducted from the accounts payable since it was refunded.

Sales April 1 to 25 see computation below Adjusted Sales — April 25 4,, , 5,, D Computation of sales: Purchases Total goods available for sale Less: Salvaged value of inventory worth P, Inventory in transit Inventory loss 2,, 2,, 5,, 2,, 2,, , 65, 2,, Computation of cost ratio: B Total 19,, 35,, 4.

The purchases for the element months should be eleven. D Unadjusted balance Shipment in Nov. Purchases for 11 months see No. Ending inventory — Nov. Sales at cost Sales in December made at a profit Multiply: Purchases for December 3,, - 2,, Less: Inventories PROBLEM Inventory, Jan 1 Purchases Purchase returns Purchase discounts Purchase allowance Freight-in Departmental Transfer-In Departmental Transfer-Out Totals Basis of computation of cost ratios Totals Markups Markup cancellations Basis of computation conservative Markdown Markdown cancellations Basis of computation average Cost, 6,, , , 50, 20, , , 5,, Retail 1,, 8,, , 1,, 1,, 8,, 5,, 8,, , 50, 9,, , , 9,, 5,, 5,, Cost ratios: Unadjusted beginning Balance Add: Adjusted Accounts Receivable balance see no.

Accounts written off Less: Allowance for doubtful accounts, ending Doubtful accounts expense 7, Cost of goods in transit to customer Adjusted merchandise inventory, 30, 10, , C, 2, 16, , , 16, , Chapter Total FL Financial Liab should be 1, instead of 1, Received dividends from Defray Co.

Brokerage and commission Net Selling Price Less: Received 1, ordinary shares from Pulsate Company. Total Fair value, , , Pref. Comments on share dividends: Accounting treatment for share dividends is actually a gray area, no clear cut rules is provided under PFRS or other accounting standard setting body.

However, the authors believe that share dividends will only be accounted as an increase in number of shares held and a decrease on the price per unit. The share dividend is not considered an income.

Since the date of declaration and date of payment is within the same period, the dividend income is computed as follows: B 66, 60, 6, , , 4. The company will only make a memo entry to record the receipt of stock right on a financial asset at FVTPL.

B The journal entries under the two classifications are as follows: The question should be dividend income in its income statement, not The base is on actual dividends declared.

A share dividend is not regarded as an income. The brokerage fee and commission of P10, and P10, respectively is charged to expense since the investment acquired is a trading security.

The investments are also acquired prior to the declaration of dividends on January 10, so they are not purchased dividend on. Commission and taxes Net selling price Less: P45 x ARP, Co. C, , P 4. Carrying value of the land Gain on exchange, , , Question No.

Carrying value of the financial asset Gain on exchange, , 50, B Chapter Since reclassification is not allowed, there is no reclassification gain or loss. Use bid price on asset held, asked price for asset to be purchased.

Carrying amount of Soliman portfolio Gain on exchange 5. Carrying amount of Aquino portfolio Loss on sale Question No. B 3,, 1,, C 4. D, 92, , , Chapter D, , , 4.

Nominal rate Multiply by: Present Value of interest payments x 3. Discount amortization Effective interest Nominal interest Present value of the investment bonds, April 1 Add: Accrued interest Total Present value of the bonds Question No.

Transaction cost Initial carrying amount P1,, 44, P1,, Since there is transaction cost incurred, effective rate must be computed. The effective rate therefore is computed at The investment therefore would be continued to be reported as Financial Assets at Amortized Cost on December 31, Carrying value, reclassification date [ P2,, x 1.

The investment will be continued to be measured at fair value and reported as Financial Assets at Fair Value Through Profit or loss on December 31, Present value of expected cash flows get the present value computed using original effective rate Impairment loss B Question No.

Present Value of interest payments, x 2 x 0. Actual amortized cost P3,, x 1. Present Value of interest payments, X 3. Present value of expected cash flows Impairment loss B 4,, 3,, , Present value of Principal 4,, x 0.

PV of interest payments No interest will be recovered Present value of the investment bonds 3,, 3,, Question No. Present value of interest payments, x 2 x 0. Discount amortization Nominal interest, Less: Effective interest, 22, Gain on reclassification C Question No.

C 3,, 2,, 5,, 31, , 5,, B 5,, 5,, , Chapter Present value of interest payments only principal will be recovered Total Present value of future cash inflows Less: C 3,, 2,, , Present value 4,, 4,, 4,, 4,, 3,, 3,, 4,, , Chapter Amortization of Undervalued valued asset see below Adjusted net investment income A 1,, , 1,, Amortization of Undervalued asset Depreciable Asset Divide by: Average remaining useful life Amortization of Undervalued valued asset 1,, 6 , Question No.

Net investment income see no. Investment in Associate Over or under valued asset: Amortization of Overvalued valued asset see below Adjusted net investment income A Amortization of Overvalued asset: Inventory 1,, 87, 1,, 50, Machinery Divide by: Remaining life Amortization of overvalued machinery, 10 37, , 10 37, Net income of the associate Multiply by: Percentage of ownership Share in the net income Dividends declared and paid Multiply by: Amortization of Overvalued valued asset see no.

Percentage of ownership Dividends received Question No. Amortization of Overvalued valued asset see table above Adjusted net investment income C 1,, 87, 1,, Question No. Net Amortization of Undervalued valued asset see no.

Total actual preference dividends declared Net income to ordinary shares Multiply by: Percentage of ownership Share in the net income of associate Less: No catch-up adjustment on retained earnings.

A Chapter Investment in Associate Fair value of previously held interest Acquisition cost Total cost of investment Less: Book value of net asset acquired Excess of attributable to machinery Divide by: Remaining life Amortization of Undervalued asset 2,, 3,, 5,, 3,, 1,, 8 , Net income of the associate - Multiply by: Total credit should be P5,, instead of P9,, Dividend income 5 x 40, Net selling price Less: Investment in Associate Question No.

Fair value P75 x 15, Less: Net investment income [ 1. The dividend received on August 1, need not be prorated even though the investment was acquired on July 1, since dividends is considered when the investor has the right to receive payment i.

Discontinuance of Equity Method Note to professor: The investment is reported at NIL or zero value. Percentage of ownership Share in the net income before adjustment Less: Unrealized profit on upstream sale of inventory Share in the net income after adjustment Chapter Change Josiah to Eldon.

Net income Multiply by: Change Josiah to Stalion. However, it was sold by Myrah Company in should be Josiah Company is the associate. Percentage of ownership Share in the net income before adjustment Unrealized gain on downstream sale of PPE Unrealized profit on upstream sale of inventory Unrealized profit on upstream sale of inventory Share in the net income after adjustment Questions No.

Net investment income - see No. If an entity cannot determine reliably the useful life, it is assumed to be 10 years. C 28, 30, 38, 37, , A 5. Fair values 11, x 23 Less: Cost, , 3, A. Castaneda Fair values 20, x 14 Less: Investment in Associate Fair value previously held interest 50, x 30 Less: Acquisition cost Initial carrying amount — investment in associate Add: Net investment income see No.

The investment in associate was acquired on January 1, should be on January 1, Balance of Investment in Associate Add: A The dividend that was paid and sold in Boy-ot shares is not classified as dividend income since the company did not own the shares when the dividend was declared.

The dividend received in Cleo Shares is not regarded as income, but as a deduction of the initial carrying amount of the investment in associate. Credit to Machine A Requirement No.

Cost of safety rail and platform surrounding machine Installation cost, including site preparation and assembling. Fees paid to consultants for advice on acquisition of the machinery.

Mortgages, encumbrances on the land assumed by buyer. Total cost of land C Question No. Payments to tenants of the building to induce them to vacate the premises.

Repairs and renovation costs before the building is occupied Unpaid taxes on the building up to the date of acquisition Legal Fees and other expenses incurred in connection with the purchase of the building Total cost of building D Question No.

Installation cost Present value of estd. It is used in any circumstances where we have information asymmetry between external records and our internal records. So, for example, we might regularly reconcile supplier statements of account.

In the second half of the lecture, we consider receivables. Why do we hold receivables? What are the risks and benefits? The accounting implications to consider are: Understand and describe the importance and function of an internal control system 2.

Describe the reasons for strong internal controls over cash 3. Understand the need for and how to maintain a petty cash fund 4. Complete a bank reconciliation 5. Explain the nature of Accounts Receivable and how it is valued 6.

Write off bad debts under the direct method 7. Write off bad debts under the allowance method 8. Make appropriate allowance for doubtful debts under the income statement approach and balance sheet approach.

Tutorial Questions — Week 8 Students should attempt these questions before the tutorial. His business, Good Seeds Pty Ltd, sells quality indoor plants to corporations seeking to brighten up their offices.

Nick has lost track of who owes him what and has no idea how much he can expect to recover. During your review you establish the following things: They have found these provisioning factors to be reasonably accurate for the past 5 years.

Further, you establish that unpaid credit sales are of the following ages and amounts: Bomb has gone bankrupt. Ipoff has left Sydney permanently for the Bahamas. She will not be paying the remainder.

Required Part 1 a Prepare journal entries to incorporate the information you have received about Dot. Create a new table of Ageing of Accounts Receivable with this information.

What is the net realisable value of accounts receivable? Part 2 a Calculate bad debts for as a proportion of credit sales. In doing so, assume that the appropriate percentage for uncollected debts is the percentage of debt outstanding from credit sales.

This percentage is to be applied to the amount of credit sales before any write-offs. Write out the journal entry. What is net realisable value of accounts receivable under this method?

Which method would you be inclined to use, and why? What are the limitations of the method you would choose? Lecture Example Lecture Example 7. The last bank reconciliation October revealed the following: Balance as per bank statement Less: Unpresented cheques Adjusted cash balance: You should assume that the bank statement is correct.

Adjusted balance as per bank Bank balance as per books Add: Adjusted balance as per books 2 Prepare the journal entries to adjust cash balance. Adjusting the cash balance: The US filing, obtained by the Herald, claims ANZ "had a long history of lacking necessary internal controls" particularly in its equities finance or stock lending operations.

She had transferred money into her accounts or a joint account with her husband by recording "phantom" and incorrect payments or duplicating legitimate payments. Authorization; Custody; Record-keeping; and Reconciliation 8 Internal control systems Features of an effective internal control system cont.

Which of the following is a feature of an effective system of internal control over cash? Cheques are signed by one staff member responsible for preparing cheques D. The petty cash fund contains a small amount of cash, out of which cash payments are made.

Disbursement from the fund: Vouchers provide evidence for amounts spent. Petty cash fund is replenished on a regular basis. Separation of duties for recording and handling cash.

Separation of duties for receiving and paying cash. All cash receipts banked in its entirety daily. Authorised supporting documentation for payments. Cheques or EFT countersigned — 2 signatures.

Physical safeguards over cash: The reimbursement entry is necessary to record expenses in the ledger. Dr Petty Cash Cr Cash at bank b. Spend the money Petrol Postage Stationery Coffee b.

Errors in either the accounting system or the bank statement. Bank Statement Usually show different balances Timing differences due to time lag in recording transactions A bank reconciliation is prepared to explain these differences.

Book errors Adjusted cash balance: Unpresented cheques 2. Service charge Adjusted cash balance: BOOK 31 34 Bank reconciliation: The news sent ANZ shares down as much as What is the journal entry?

This amount is then multiplied by net credit sales to estimate the bad debts expense. This has NO impact on profit. This has NO impact on total assets. Wh t is What i the th jjournall entry?

Creating an allowance for doubtful debts Dr Bad debts expense xxx C Allowance for Cr f doubtful f debts xxx Please provide your answer below 2. When an uncollectible account receivable is written off against the allowance for bad debts: A total current assets decrease A.

Introduction to Inventory and Non-Current Assets 1. This week, we consider how to account for inventory by examining the different types of inventory systems and the different cost flow assumptions that underpin inventory valuation.

You need to consider the cost of inventory How much did it cost? However, it is not easy to be determined because, often, inventory purchases are made at various times during the year, where the price of these items may vary.

Working out cost is only straight forward if you track items individually, and tracking items individually is only worth it if they are big or expensive, like cars or jewellery.

Individual tracking is known as the specific identification approach. So you have to make an assumption about the flow. A always equals B. Try it for yourself!

After this you still have to compare cost to market value, and finally you can come up with a number for inventory on the Balance Sheet! Non-current assets typically lose value over time so it is necessary to look at how to account for changes in value post acquisition.

In the end, we will examine the impact of selling and disposing non-current assets. For those students continuing on to more advanced financial accounting courses, it is highly advisable that you gain a solid understanding of all these concepts.

Learning objectives At the end of this topic, you will be able to: Describe the difference between perpetual and periodic inventory system 2. Prepare journal entries supporting both perpetual and periodic inventory system 3.

Understand cost flow assumptions: Define and classify different types of assets 5. Calculate the three different method of depreciation 6. Explain and apply the different methods of depreciation and their impact on the financial statements.

Tutorial Questions — Week 9 Students should attempt these questions before the tutorial. Lecture Example Lecture Example 8. Equal to all inventory we had at the beginning and some of the first batch units purchased.

Weighted Average Periodic 1 Calculate the average cost: Wei CHEN Quad Room Inventory usually current asset, but could be a non-current asset, if it is likely to stay in the company for more than 12 months.

Inward transport and handling costs Note: Outward transport costs are selling expense Any other directly attributable costs of acquisition Less: Purchases 60, L Less: Inventory This applies to periodic and perpetual inventory systems.

Inventory xxx Dr Inventory cl. The entry to record a credit purchase when the periodic inventory method is employed will include a: What is the cost of goods sold? Appropriate for products that are homogeneous i.

The actual physical flow of inventory may be different. Does not often match physical flow. Results in an outdated inventory balance inventory recorded at old prices. Not permitted under Australian accounting standards.

Suitable assumption for perishable items or those subject to obsolescence. Closing inventory balance is closer to current cost relative to LIFO and weighted average.

Assume there are no stock losses. FIFO are the same for periodic and perpetual. What is the value of inventory at the end of the year, according to the first-in, first-out method? Current assets increase; profits increase B.

Current assets increase; profits decrease C. Current assets decrease; profits increase D. Smith Limited purchased a large machine to use in its operations.

That is, after 5 years, the asset cannot be used or sold i. The following costs were incurred: Determine the cost of the new machine. Using the straight-line depreciation method, Note: Reducing balance Residual value issue Cost: Using reducing balance depreciation method, What is the depreciation expense for the first and second year?

The depreciation expense is 11, for the first year. What is the depreciation expense for the first and second year? It has an estimated useful life of 5 years with no residual value.

If the company switched from Straight-line method to reducing balance method, what are the effects on the depreciation expense for and carrying amount of this machine at the end of?

If there has been a significant change in expected consumption of future economic benefits, the method should be changed to reflect this. Subsequent expenditure on an asset should be added to the cost of the asset and depreciation adjusted accordingly if the definition and recognition criteria for assets are met.

The straight Th t i ht line li method th d was used d tto record d depreciation on the old asset. Replacing the tires on the delivery van. Converting the delivery van from using petrol to using LPG.

Prepare journal entries to record the events explained. Installing airbags as an added safety factor for the delivery van driver. The business consisted of: Research and Development the recognition criteria is more strict.

It is not as technical as your previous lectures, but it is still a demanding lecture as it is not enough just to know, but you must also understand, explain, discuss and be able to apply the material covered.

These concepts and principles act as a guide to accountants in preparing financial statements. We will concentrate on the framework, which includes the coverage of the objectives of financial reporting, the underlying assumptions of financial reports, the qualitative characteristics of financial reports, the definition of assets, liabilities and the recognition and measurement of these elements of financial statements.

Some of this material will overlap with earlier lectures. We will learn some basics about audit report, such as types of audit opinion, and talk about some recommendations for good corporate governance.

We will also look at the ethical considerations of being an accountant. The last decade has left a trial of corporate collapse, accounting scandals and legislation implementation around the world.

The principle of accounting, the quality of the audit, the practices of good corporate governance, and the ethical issues that underpins the accounting profession are very relevant and important issues.

We will take a look at the statement of Cash Flows, which is the third important statement of financial reports. The statement of Cash flows focuses on actual inflows and outflows of cash.

We will learn how to classify those cash inflows and outflows into three major categories i. Tutorial Questions — Week 10 Students should attempt these questions before the tutorial. Bush signed into law the Sarbanes-Oxley Act of addressing corporate accountability.

A response to recent financial scandals that had begun to undermine citizens' confidence in U. The act places new legal constraints on executives and gives expanded protections to whistle-blowers.

Perhaps most important, though, it puts the accounting industry under tightened federal oversight. It creates a regulatory board-with broad powers to punish corruption-to monitor accounting firms, and it establishes stiff criminal penalties, including long jail terms, for accounting fraud.

If only it were that easy. Given the vast scale of recent accounting scandals and their devastating effects on workers and investors, it's not surprising that the government and the public assume that the underlying problems are corruption and criminality-unethical accountants falsifying numbers to protect equally unethical clients.

But that's only a small part of the story. Serious accounting problems have long plagued corporate audits, routinely leading to substantial fines for accounting firms. Some of the errors, no doubt, are the result of fraud.

But to attribute most errors to deliberate corruption would be to believe that the accounting profession is rife with crooks-a conclusion that anyone who has worked with accountants knows is untrue.

The deeper, more pernicious problem with corporate auditing, as it's currently practiced, is its vulnerability to unconscious bias. Indeed, even seemingly egregious accounting scandals, such as Andersen's audits of Enron, may have at their core a series of unconsciously biased judgments rather than a deliberate program of criminality.

Unlike conscious corruption, unconscious bias cannot be deterred by threats of jail time. Rooting out bias, or at least tempering its effects, will require more fundamental changes to the way accounting firms and their clients operate.

If we are really going to restore trust in the U. We will need to embrace practices and regulations that recognize the existence of bias and moderate its ill effects. Only then can we be assured of the reliability of the financial reports issued by public companies and ratified by professional accountants.

The Roots of Bias Psychological research shows that our desires powerfully influence the way we interpret information, even when we're trying to be objective and impartial.

When we are motivated to reach a particular conclusion, we usually do. That's why most of us think we are better than average drivers, have smarter than average children, and choose stocks or funds that will outperform the market-even if there's clear evidence to the contrary.

Without knowing it, we tend to critically scrutinize and then discount facts that contradict the conclusions we want to reach, and we uncritically embrace evidence that supports our positions.

Unaware of our skewed information processing, we erroneously conclude that our judgments are free of bias. Many experiments have demonstrated the power of self-serving bias and shown, for example, how bias can distort legal negotiations.

They were given the task of negotiating a settlement and were told that if they couldn't reach one, a judge would decide the award amount, and both parties would pay substantial penalties.

Finally, before starting the negotiation, each participant was asked to predict the amount the judge would award the plaintiff if negotiations stalled. The results were striking. Participants playing the motorcyclist plaintiff tended to predict that they'd receive dramatically larger awards than the defendants predicted.

This is an example of self-serving bias: Armed with the same information, different people reach different conclusions-ones that favor their own interests.

In addition, the degree to which the two hypothetical awards differed was an excellent predictor of the likelihood that the pair would negotiate a settlement. The greater the difference in the negotiators' beliefs, the harder it was for them to come to agreement.

How can such an impulse toward self-serving bias be moderated? In follow-up experiments, the same researchers tried to reduce participants' bias by paying them to accurately predict the amount of the judge's award and having them write essays arguing the other side's point of view.

Neither strategy reduced bias; participants consistently thought that the judge would award damages that favored their side. And what about educating the subjects, alerting them that they were likely to reach biased conclusions?

That didn't work, either. After teaching participants about bias and testing them to make sure they understood the concept, the researchers found that the participants concluded that their negotiating opponents would be highly biased but refused to believe that they themselves would be.

In yet another of these experiments, participants were presented with 16 arguments-eight favoring the side they had been assigned plaintiff or defendant and eight favoring the otherand were asked to predict how a neutral third party would rate the quality of the arguments.

In general, study participants found arguments that favoured their own positions more convincing than those that supported the other side. But when participants were assigned to the role of plaintiff or defendant only after they'd seen the case materials-and so were unbiased in their evaluation of the data-their degree of bias was significantly less.

Taken together, these findings suggest that unconscious bias works by distorting how people interpret information. But the corporate auditing arena is a particularly fertile ground for self-serving biases.

Three structural aspects of accounting create substantial opportunities for bias to influence judgment. Bias thrives wherever there is the possibility of interpreting information in different ways.

As we saw in the study involving the collision, people tend to reach selfserving conclusions whenever ambiguity surrounds a piece of evidence. While it's true that many accounting decisions are cut-and-dried-establishing a proper conversion rate for British pounds, for instance, entails merely consulting daily foreign exchange rates-many others require interpretations of ambiguous information.

Auditors and their clients have considerable leeway, for example, in answering some of the most basic financial questions: When should revenue be recognized? The interpretation and weighting of various types of information are rarely straightforward.

As Joseph Berardino, Arthur Andersen's former chief executive, said in his congressional testimony on the Enron collapse, "Many people think accounting is a science, where one number, namely earnings per share, is the number, and it's such a precise number that it couldn't be two pennies higher or two pennies lower.

I come from a school that says it really is much more of an art. Auditors have strong business reasons to remain in clients' good graces and are thus highly motivated to approve their clients' accounts.

Under the current system, auditors are hired and fired by the companies they audit, and it is well known that client companies fire accounting firms that deliver unfavorable audits. Even if an accounting firm is large enough to absorb the loss of one client, individual auditors' jobs and careers may depend on success with specific clients.

Moreover, in recent decades, accounting firms have increasingly treated audits as ways to build relationships that allow them to sell their more lucrative consulting services. Thus, from the executive team down to individual accountants, an auditing firm's motivation to provide favorable audits runs deep.

As the collision case also showed, once people equate their own interests with another party's, they interpret data to favor that party. An audit ultimately endorses or rejects the client's accounting-in other words, it assesses the judgments that someone in the client firm has already made.

Research shows that self-serving biases become even stronger when people are endorsing others' biased judgmentsprovided those judgments align with their own biases-than when they are making original judgments themselves?

In one series of studies, researchers found that people were more willing to endorse an overly generous outcome that favored them than they were to make that judgment themselves. For example, if someone says that you deserve a higher raise than facts might suggest, you are more likely to come to agree with this view than you are to decide on your own that you deserve a higher raise.

This kind of thinking implies that an auditor is likely to accept more aggressive accounting from her client than what she might suggest independently. In addition to these structural elements that promote bias, three aspects of human nature can amplify unconscious biases.

People are more willing to harm strangers than individuals they know, especially when those individuals are paying clients with whom they have ongoing relationships. An auditor who suspects questionable accounting must thus choose, unconsciously perhaps, between potentially harming his client and himself by challenging a company's accounts or harming faceless investors by failing to object to the possibly skewed numbers.

Given this tension, auditors may unconsciously lean toward approving the dubious accounting. And their biases will grow stronger as their personal ties deepen. The longer an accounting partner serves a particular client, the more biased his judgments will tend to be.

People tend to be far more responsive to immediate consequences than delayed ones, especially when the delayed outcomes are uncertain. Many human vices spring from this reflex. We postpone routine dental checkups because of the cost and inconvenience and the largely invisible long-term gain.

In the same way, auditors may hesitate to issue critical audit reports because of the adverse immediate consequences damage to the relationship, potential loss of the contract, and possible unemployment.

But the costs of a positive report when a negative report is called for-protecting the accounting firm's reputation or avoiding a lawsuit, for example-are likely to be distant and uncertain.

It's natural for people to conceal or explain away minor indiscretions or oversights, sometimes without even realizing that they're doing it. Think of the manager who misses a family dinner and blames the traffic, though he simply lost track of time.

Likewise, an auditor's biases may lead her to unknowingly adapt over time to small imperfections in a client's financial practices. Eventually, though, the sum of these small judgments may become large and she may recognize the long-standing bias.

But at that point, correcting the bias may require admitting prior errors. Rather than expose the unwitting mistakes, she may decide to conceal the problem. Thus, unconscious bias may evolve into conscious corruption-corruption representing the most visible end of a situation that may have been deteriorating for some time.

It's our belief that some of the recent financial disasters we've witnessed began as minor errors of judgment and escalated into corruption. Otherwise, it will be revealed that they had used improper accounting in the earlier periods.

You can't review a corporate audit and pick out errors attributable to bias. Often, we can't tell whether an error in auditing is due to bias or corruption. But you can design experiments that reveal how bias can distort accounting decisions.

We recently did just that, with telling results. We gave undergraduate and business students a complex set of information about the potential sale of a fictional company and asked them to estimate the company's value.

Participants were assigned different roles: All subjects read the same information about the company. As we expected, those who hoped to sell the firm thought the company was worth more than the prospective buyers did.

More interesting were the opinions offered by the auditors: Their judgments were strongly biased toward the interests of their clients. These auditors displayed role-conferred biases in two ways.

First, their valuations judgments were biased in the clients' favor: Second, and more tellingly, their private judgments about the company's value were also biased in their clients' favor: At the end of the experiment, the auditors were asked to estimate the company's true value and were told that they would be rewarded according to how close their private judgments were to those of impartial experts.

This exemplifies the persistent influence of serf-serving biases: Once participants interpreted information about the target company in a biased way, they were unable to undo the bias later.

Earlier this year, we ran a study with Lloyd Tanlu that focused on professional auditors themselves. The study, of auditors employed full time by one of the big U.

Each participant was given five ambiguous auditing vignettes and asked to judge the accounting for each. Haft the participants were asked to suppose that they had been hired by the company they were auditing; the rest were asked to suppose they had been hired by a different company, one that was conducting business with the company that had created the financial statements.

In addition, half the participants in each of those two groups generated their own auditing numbers first, then stated whether they believed that the firm's financial reports complied with generally accepted accounting principles GAAP, while the other half did the two tasks in the reverse order.

Furthermore, the participants who generated their own auditing numbers after first passing judgment on the company's financial reports tended to come up with numbers that were closer than the other participants' to the client's numbers.

The study showed both that experienced auditors are not immune from bias and that they are more likely to accede to a client's biased accounting numbers than to generate such numbers themselves.

These experiments show that even the suggestion of a hypothetical relationship with a client distorts an auditor's judgments. Imagine the degree of distortion that must exist in a longstanding relationship involving millions of dollars in ongoing revenues.

Some of the reforms, in fact, may well make it worse. Consider the provisions dealing with disclosure. They require individual auditors or their firms to reveal conflicts of interest to investors.

But to counteract bias, such disclosure must either inhibit bias outright or allow investors to adjust for it. With regard to inhibiting bias, we saw earlier that a person's conscious efforts to reduce bias have limited effect.

And the latter idea, that disclosure would help investors interpret auditors' reports, would be of little benefit unless investors knew how a disclosed conflict of interest biased an auditor's judgment.

By how much should the investor adjust the company's self-reported earnings per share? Without specific guidance, people cannot accurately factor conflict of interest into their investment decisions.

More worrisome is evidence that disclosure could actually increase bias. If auditors suspect that disclosure will lead investors to discount or make adjustments for the auditors' public statements, they may feel less duty bound to be impartial and may make judgments more closely aligned with their personal interests.

Research by Daylian Cain, Don Moore, and George Loewenstein paired participants and assigned one member of each pair to the role of estimator and the other to that of adviser. The estimator viewed several jars of coins from a distance, estimated the value of the money in them, and was paid according to how close the estimates were to the jars' true values.

The adviser, who could study the jars up close, gave the estimator advice. The adviser, however, was not paid according to the estimator's accuracy but according to how high the estimator's guesses were.

In other words, advisers had an incentive to mislead the estimators so that they would guess high. In addition, we told half of the estimators about the advisers' pay arrangement; we said nothing about it to the rest.

Disclosure had two effects. As a result, disclosure led advisers to make much more money and estimators to make much less. Applied to auditing, this finding suggests that auditors who are forced to disclose conflicts might exhibit greater self-serving bias.

One other proposed policy warrants mention: This remedy, too, is unlikely to improve the situation. Research shows that it takes very little ambiguity to produce biased judgments?

In one study, some participants were asked to imagine that they had worked seven hours on a task and that another person had worked ten hours on the same task. Other participants were asked to imagine the opposite scenario: They'd worked ten hours on the project while the other person worked seven.

Here, all it took was a tiny bit of ambiguity-whether the fair solution was equal hourly pay as the ten-hour people thought or equal total pay as the seven-hour people thought - to produce different self-serving assessments of fairness.

Note, too, that the incentives for being biased in this study were awfully weak because the question was hypothetical; in the real world, incentives for bias are far stronger.

It seems implausible that stricter accounting rules could eliminate ambiguity-and thus they are unlikely to reduce self-serving bias. Radical Remedies The key to improving audits, clearly, is not to threaten or cajole.

It must be to eliminate incentives that create self-serving biases. This means that new policies must reduce an auditor's interest in whether a client is pleased by the results of an audit.

One provision of the Sarbanes-Oxley Act prohibits accounting firms from providing certain consulting services to companies they audit. This is a step in the right direction, but it doesn't go far enough.

Clearly, accounting firms that advise their clients on how to boost profits, while at the same time trying to impartially judge their books, face an impossible conflict of interest.

Unfortunately, while the new law limits the consulting services auditing firms can provide, it doesn't prohibit them entirely, and it gives the new oversight board created by the Sarbanes-Oxley Act the option of overriding this provision.

True auditor independence requires, as a start, full divestiture of consulting and tax services. And even then, a fundamental problem will remain: Because auditors are hired and fired by the companies they audit, they are in the position of possibly casting negative judgments on those who hired them-and who can cut them loose.

Therefore, even with the elimination of consulting, the fundamental structure of the auditing system virtually ensures biased auditing. To eliminate this source of bias, we must remove the threat of being fired for delivering an unfavorable audit.

Auditors must have fixed, limited contract periods during which they cannot be terminated. All fees and other contractual details should be specified at the beginning of the contract and must be unchangeable.

In addition, the client must be prohibited from rehiring the auditing firm at the end of the contract; instead, the major accounting firms would be required to rotate clients.

Current legislation requires auditor rotation; however, this is defined as a change in the lead partner within an auditing firm. There is no provision to rotate the firms conducting the audit, and there is no provision to prevent a client from firing an auditor.

Thus, auditors will continue to have powerful incentives to keep their clients happy. Audit clients must also be prohibited from hiring individual accountants away from their audit firms.

As the Enron scandal unfolded, the common practice of Arthur Andersen employees taking positions with Enron, and vice versa, came to light. Clearly, an auditor can't be impartial when he or she hopes to please a client in order to develop job options.

We believe that auditors should be barred from taking positions with the firms they audit for at least five years. Less tangibly, auditors must come to appreciate the profound impact of self-serving biases on judgment.

Professional schools have begun to take ethics seriously in recent years, but teaching auditors about ethics will not have an impact on bias. What's needed is education that helps auditors understand the unconscious errors they make and the reasons they make them.

And audit leaders who say that so-called professionalism is a sufficient safeguard against audit error-a claim that's inconsistent with the weight of empirical evidence on human judgmentmight abandon that claim if they truly understood the role of bias in auditing.

Our proposals are not perfect. Indeed, it's hard to imagine any practical system that could eliminate all bias. Even with our remedies, for instance, it's still possible that auditors' social contact with clients could introduce subtle biases.

But we envision a system in which clients regard auditors as more like tax collectors than partners or advisers-a system that could be expected to at least ameliorate bias.

Devising a more robust separation of auditor and client, one that might go further to reduce bias, would require approaches-such as turning over the auditing function to government-that could create problems as serious as those they solve.

We see our proposals as both realistic and effective. In the absence of radical and innovative reform, we believe, further accounting disasters are inevitable. Bazerman; George Loewenstein and Don A.

George Loewenstein is a professor of economics and psychology at Carnegie Mellon University in Pittsburgh. Moore is an assistant professor of organizational behavior and theory at Carnegie Mellon's Graduate School of Industrial Administration.

The range of answers is shocking. However, these tax professionals could be proud that they agreed far more than did their colleagues who performed a similar exercise in How could experts disagree so vastly on something that seems as objective as accounting?

It turns out that deciding what is income, what is deductible, and what is an appropriate depreciation schedule is subjective. Judgment calls are part of a tax preparer's work.

Similarly, at a corporate level, a myriad of ambiguous accounting questions, such as when to recognize revenue and which items to expense, opens the door for selfserving interpretations. With executives deciding how to state earnings, the two treatments can significantly affect the bottom line reported to the public.

Another indication of ambiguity in accounting is the common practice of negotiating about accounting rules. These negotiations, for example, might involve the timing of revenue and expenses recognition.

Executives are often in a hurry to recognize revenue but prefer to delay recognizing an expense. If there were such a thing as "correct" timing, these negotiations wouldn't take place.

Another indication of auditing ambiguity is the tendency of clients to opinion-shop-that is, to ask multiple auditors to interpret specific accounting problems before deciding whom to hire.

Because no "right" conclusion exists, different auditing firms can have different opinions. Finally, in the current political discussion about expensing options, opponents of expensing often argue that an option's value is too ambiguous to assess.

They proffer ambiguity as a justification for ignoring the value of options executives receive. Going concern 7 Accrual Accounting Recognise revenue at the point of sale and recognise expenses when incurred incurred, even though the cash receipt or payment occurs at another time.

The decision by a motor repair company to expense small tools immediately on acquisition rather than depreciate them over their useful lives is an application of the concept of: An exchange has occurred 2.

It possesses a cost or other value that can be measured reliably 3. It is probable that the future economic benefits embodied in the asset will eventuate Does the item have all three essential characteristics of an asset?

Yes Does the asset meet both the recognition criteria? Does it possess FEB? Are the FEB probable? Are these future benefits under the control of the company? Can they y be reliably y measured?

Has there been a past transaction? Please complete the boxes in the next 3 examples. Essential characteristics i ii iii If not sure, discuss with your neighbours. Recognition criteria a b 27 Illustration 2 assets Illustration 3 assets ii A highly specialised machine that has resale value.

Essential characteristics 28 i iii A new artificial sweetener that the company has developed, but requires government approval before being sold to the public. Present obligations of the entity arising from past events, the settlements of what are expected to result in an outflow from the entity of resources embodying economic benefits.

A liability should be recognised when and only when: Such a bonus is generally paid each year. If not sure, discuss with your neighbours.

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Answer to P (Notes Receivable Journal Entries) On December 31, , Oakbrook Inc. rendered services to Beghun Corporation at a. E Computing bad debts and preparing journal entries. Simple 8–10 E Bad-debt reporting. Simple 10 P Notes receivable journal entries.

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20.03.2018 - Required Part 1 a Prepare journal entries to incorporate the information you have received about Dot. A 19, 81, 40,Case 2 4. Cash and Cash Equivalents X. Ccleaner free download for windows 7 64 bit filehi... While it's true that many accounting decisions are cut-and-dried-establishing a proper conversion rate for British pounds, for instance, entails merely consulting daily foreign exchange rates-many others require interpretations of ambiguous information. It must be to eliminate incentives that create self-serving biases.

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Problem Principal is due in equal annual payments, starting December 31, Principal is due in equal annual payments, starting December 31, Present Interest Principal value factor collections 0.

Loans and Receivables Question No. A 1,, , , 4. Accumulated depreciation Gain on sale Question Nos. A, , , 4. Based on the original data Requirement No.

Loan receivable principal amount Less: Unearned interest income Origination fee received, Less: Accrued interest receivable 1,, 17,, Less: Accrued interest receivable, 1,, Less: PV factor Principal Total collections 0.

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The amount of interest expense is computed in a similar way as to that of discounted note without recourse or conditional sale. P, 5, P, C 5. P, 30, P, C Chapter Balance DA expense 7.

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However, the authors believe that share dividends will only be accounted as an increase in number of shares held and a decrease on the price per unit. The share dividend is not considered an income.

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The dividend received in Cleo Shares is not regarded as income, but as a deduction of the initial carrying amount of the investment in associate. Credit to Machine A Requirement No. Cost of safety rail and platform surrounding machine Installation cost, including site preparation and assembling.

Fees paid to consultants for advice on acquisition of the machinery. Mortgages, encumbrances on the land assumed by buyer. Total cost of land C Question No.

Payments to tenants of the building to induce them to vacate the premises. Repairs and renovation costs before the building is occupied Unpaid taxes on the building up to the date of acquisition Legal Fees and other expenses incurred in connection with the purchase of the building Total cost of building D Question No.

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With a facility e. As a result there are no surplus funds to invest and interest is paid only on those amounts withdrawn. This loan was outstanding throughout the construction period.

Rate Capitalizable borrowing cost, , , Change To: Property, Plant and Equipment Question No. Specific borrowing Excess attributable to general borrowing Multiply by: Months outstanding Capitalizable borrowing cost — general borrowings Add: Revised residual value Depreciable amount Divide by: Residual value Depreciable amount Divide by: Useful life Depreciation expense Chapter The carrying amount should not be reduced below its residual value.

Salvage proceeds Depreciation Chapter Residual value Depreciable amount Divided by: Revised remaining useful life Depreciation — 1,, , 1,, 2 , Requirement No. Remaining useful life 8 — 4 Depreciation — 1,, , 1,, 4 , Requirement No.

Residual value Depreciable amount Multiply by: Change Pine to Jeremy. Balance of the Land Cash paid Mortgage assumed Realtor's commission Legal fees, realty taxes and documentation expenses Amount paid to relocate persons squatting on the property Total Cost of the Land B P, 2,, 4,, , 50, , P7,, Question No.

Balance of the Building Amount recovered from salvage of building Cost of tearing down an old building Amount paid to contractor Building permit Excavation expenses Architects' fees Total cost of building Question No.

Balance of the Machinery Invoice cost of machinery Freight, unloading Customs duties Allowances during installations Total cost of machinery Question No. However, if royalty payment is based on units produced and sold, it should be treated as a selling expense.

Property, Plant and Equipment General borrowings: Specific borrowings Actual borrowing cost Less: Using the straight-line depreciation method, Note: Reducing balance Residual value issue Cost: Using reducing balance depreciation method, What is the depreciation expense for the first and second year?

The depreciation expense is 11, for the first year. What is the depreciation expense for the first and second year? It has an estimated useful life of 5 years with no residual value. If the company switched from Straight-line method to reducing balance method, what are the effects on the depreciation expense for and carrying amount of this machine at the end of?

The straight Th t i ht line li method th d was used d tto record d depreciation on the old asset. Replacing the tires on the delivery van. Converting the delivery van from using petrol to using LPG.

We will also look at the ethical considerations of being an accountant. The last decade has left a trial of corporate collapse, accounting scandals and legislation implementation around the world.

We will take a look at the statement of Cash Flows, which is the third important statement of financial reports. The statement of Cash flows focuses on actual inflows and outflows of cash. We will learn how to classify those cash inflows and outflows into three major categories i.

Tutorial Questions — Week 10 Students should attempt these questions before the tutorial. Bush signed into law the Sarbanes-Oxley Act of addressing corporate accountability.

A response to recent financial scandals that had begun to undermine citizens' confidence in U. The act places new legal constraints on executives and gives expanded protections to whistle-blowers.

But that's only a small part of the story. Serious accounting problems have long plagued corporate audits, routinely leading to substantial fines for accounting firms.

Some of the errors, no doubt, are the result of fraud. But to attribute most errors to deliberate corruption would be to believe that the accounting profession is rife with crooks-a conclusion that anyone who has worked with accountants knows is untrue.

The Roots of Bias Psychological research shows that our desires powerfully influence the way we interpret information, even when we're trying to be objective and impartial. When we are motivated to reach a particular conclusion, we usually do.

That's why most of us think we are better than average drivers, have smarter than average children, and choose stocks or funds that will outperform the market-even if there's clear evidence to the contrary.

Without knowing it, we tend to critically scrutinize and then discount facts that contradict the conclusions we want to reach, and we uncritically embrace evidence that supports our positions.

They were given the task of negotiating a settlement and were told that if they couldn't reach one, a judge would decide the award amount, and both parties would pay substantial penalties.

Finally, before starting the negotiation, each participant was asked to predict the amount the judge would award the plaintiff if negotiations stalled. The results were striking.

Participants playing the motorcyclist plaintiff tended to predict that they'd receive dramatically larger awards than the defendants predicted. This is an example of self-serving bias: Armed with the same information, different people reach different conclusions-ones that favor their own interests.

In addition, the degree to which the two hypothetical awards differed was an excellent predictor of the likelihood that the pair would negotiate a settlement.

The greater the difference in the negotiators' beliefs, the harder it was for them to come to agreement. How can such an impulse toward self-serving bias be moderated? In follow-up experiments, the same researchers tried to reduce participants' bias by paying them to accurately predict the amount of the judge's award and having them write essays arguing the other side's point of view.

Three structural aspects of accounting create substantial opportunities for bias to influence judgment. Bias thrives wherever there is the possibility of interpreting information in different ways.

Moreover, in recent decades, accounting firms have increasingly treated audits as ways to build relationships that allow them to sell their more lucrative consulting services.

Thus, from the executive team down to individual accountants, an auditing firm's motivation to provide favorable audits runs deep. As the collision case also showed, once people equate their own interests with another party's, they interpret data to favor that party.

An audit ultimately endorses or rejects the client's accounting-in other words, it assesses the judgments that someone in the client firm has already made. Research shows that self-serving biases become even stronger when people are endorsing others' biased judgmentsprovided those judgments align with their own biases-than when they are making original judgments themselves?

In one series of studies, researchers found that people were more willing to endorse an overly generous outcome that favored them than they were to make that judgment themselves.

For example, if someone says that you deserve a higher raise than facts might suggest, you are more likely to come to agree with this view than you are to decide on your own that you deserve a higher raise.

But the costs of a positive report when a negative report is called for-protecting the accounting firm's reputation or avoiding a lawsuit, for example-are likely to be distant and uncertain.

But at that point, correcting the bias may require admitting prior errors. Rather than expose the unwitting mistakes, she may decide to conceal the problem.

Thus, unconscious bias may evolve into conscious corruption-corruption representing the most visible end of a situation that may have been deteriorating for some time. It's our belief that some of the recent financial disasters we've witnessed began as minor errors of judgment and escalated into corruption.

Otherwise, it will be revealed that they had used improper accounting in the earlier periods. You can't review a corporate audit and pick out errors attributable to bias. Often, we can't tell whether an error in auditing is due to bias or corruption.

But you can design experiments that reveal how bias can distort accounting decisions. We recently did just that, with telling results. We gave undergraduate and business students a complex set of information about the potential sale of a fictional company and asked them to estimate the company's value.

More interesting were the opinions offered by the auditors: Their judgments were strongly biased toward the interests of their clients. These auditors displayed role-conferred biases in two ways. First, their valuations judgments were biased in the clients' favor: Second, and more tellingly, their private judgments about the company's value were also biased in their clients' favor: At the end of the experiment, the auditors were asked to estimate the company's true value and were told that they would be rewarded according to how close their private judgments were to those of impartial experts.

This exemplifies the persistent influence of serf-serving biases: Once participants interpreted information about the target company in a biased way, they were unable to undo the bias later.

Earlier this year, we ran a study with Lloyd Tanlu that focused on professional auditors themselves. The study, of auditors employed full time by one of the big U. Each participant was given five ambiguous auditing vignettes and asked to judge the accounting for each.

Haft the participants were asked to suppose that they had been hired by the company they were auditing; the rest were asked to suppose they had been hired by a different company, one that was conducting business with the company that had created the financial statements.

The study showed both that experienced auditors are not immune from bias and that they are more likely to accede to a client's biased accounting numbers than to generate such numbers themselves.

Some of the reforms, in fact, may well make it worse. Consider the provisions dealing with disclosure. They require individual auditors or their firms to reveal conflicts of interest to investors.

By how much should the investor adjust the company's self-reported earnings per share? Without specific guidance, people cannot accurately factor conflict of interest into their investment decisions.

One other proposed policy warrants mention: This remedy, too, is unlikely to improve the situation. Research shows that it takes very little ambiguity to produce biased judgments? In one study, some participants were asked to imagine that they had worked seven hours on a task and that another person had worked ten hours on the same task.

Other participants were asked to imagine the opposite scenario: They'd worked ten hours on the project while the other person worked seven. Here, all it took was a tiny bit of ambiguity-whether the fair solution was equal hourly pay as the ten-hour people thought or equal total pay as the seven-hour people thought - to produce different self-serving assessments of fairness.