Q1.The accounting standards are set by specific Organizations depends on the country location and regulations. You are asked to answer the following questions :
a. What are the developing US Financial Accounting Standards Organizations with each organization responsibilities? Please write one paragraph. (1.5 marks)
b. What are the processes of setting a new accounting standard in the USA? Please write one paragraph. (1.5 marks)
Q2. Prepare general journal entries on December 31 to record the following unrelated year-end adjustments. (6 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 Fisk Corporation on December 31, 2010.
Account Debit Credit
Cash $ 12,000
Accounts Receivable 40,000
Note Receivable 7,000
Allowance for Doubtful Accounts $ 1,800
Merchandise Inventory 44,000
Prepaid Insurance 4,800
Furniture and Equipment 125,000
Accumulated Depreciation–F. & E. 15,000
Accounts Payable 10,800
Share Capital–Ordinary 44,000
Retained Earnings 55,000
Cost of Goods Sold 111,000
Salaries Expense 50,000
Rent Expense 12,800
Totals $406,600 $406,600
At year end, the following items have not yet been recorded.
a. Insurance expired during the year, $2,000.
b. Estimated bad debts, 1% of gross sales.
c. Depreciation on furniture and equipment, 10% per year.
d. Interest at 6% is receivable on the note for one full year.
*e. Rent paid in advance at December 31, $5,400 (originally charged to expense).
f. Accrued salaries at December 31, $5,800.
(a) Prepare the necessary adjusting entries. (3 marks)
(b) Prepare the necessary closing entries. (3 marks )
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