Saudi Electronic University - ACCT 201

FINANCIAL ACCOUNTING ACCT 201

ASSIGNMENT 2

Q1) Differentiate Cash basis vs. accrual basis of accounting.

Q2. Presented below are selected accounts of Aramco Company at December 31, 2010.

FinishedGoods	SAR 52,000	Cost of GoodsSold	SAR 2,100,000
Revenue Received in Advance	90,000	Notes Receivable	40,000
Equipment	253,000	AccountsReceivable	161,000
Work-in-Process	34,000	RawMaterials	187,000
Cash	42,000	Supplies Expense	60,000
Trading Securities	29,000	Allowance for DoubtfulAccounts	12,000
Customer Advances	36,000	Licenses	18,000
Cash Restricted for Plant Expansion	50,000	Share Premium - Ordinary	88,000
		Treasury Stock	22,000

The notes receivables are due April 30, 2012, with interest receivable every April 30. The notes bear 6% interest (Hint: Accrue interest due on December 31, 2010.)

Instructions:

Prepare the current assets section of AramisCompany’sDecember 31, 2010, statement of financial position, with appropriate disclosures.

Q3. Record the following transactions of Reed Co. in the desired manner and give the adjusting entry on December 31, 2010. (Two entries for each part.)

An insurance policy for two years was acquired on April 1, 2010 for $8,000.

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:

Net income was $235,200.

Depreciation was $31,600.

Land was sold at its original cost.

Dividends of $96,600 were paid.

Equipment was purchased for $84,000 cash.

A long-term note for $201,600 was used to pay for an equipment purchase.

Share capital–ordinary was issued to pay a $67,200 long-term note payable.

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Saudi Electronic University - ACCT 201 FINANCIAL ACCOUNTING ACCT 201 ASSIGNMENT 2 Q1) Differentiate Cash basis vs

Accounting

Saudi Electronic University - ACCT 201

FINANCIAL ACCOUNTING ACCT 201