Canadian International Matriculation

Programme
Sunway University College

ACCOUNTING (BAT4M)
FINAL EXAMINATION
Date: 21 May, 2007

Time: 11.30am – 1.30pm

Length: 2 hours

Lecturers: Ms Vinaya & Ms Evelyn

Please read the following instructions carefully before you begin the examination:

1. This exam paper has 12 printed pages (including cover page).

2. The examination is worth 30 percent of your final mark.

3. The examination consists of three parts.

PAR CONTENT MARK

TS S
A Multiple Choice Questions 20
B Thinking and Problem 69
Solving
C Knowledge and 11
Understanding
TOTAL 100

4. All work is to be done in the answer booklets provided. Please hand in both the booklet and
exam paper before leaving the exam hall.

5. Answers must be written in standard English format for an academic audience.

6. Answers must be double-spaced.

7. Answers must be written in black or blue pen only.

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Part B

Question 1

The trial balance of Mexx Corporation has the following accounts

at December 31, the end of the company’s fiscal year:

Mexx Corpoartion
Trial Balance
31 December 2006

Debit Credit
$ $
Cash 24,300
Accounts Receivable 15,400
Merchandise Inventory 23,600
Building 85,000
Accumulated Depreciation-Building 50,000
Equipment 45,000
Accumulated Depreciation-Equipment 9,000
Prepaid Insurance 5,400
Notes Payable 60,000
Accounts Payable 16,600
Chandra J., Capital 65,000
Chandra J., Drawings 2,300
Sales 92,300
Sales Return and Allowances 6,600
Sales Discounts 1,500
Cost of Goods Sold 43,200
Salaries Expense 15,000
Rent Expenses 12,000
Advertising Expense 5,600
Utilities Expense 4,000
Repair Expense 2,400
Storage Expense 1,600

292,900 292,900

Adjustment data:

1. Depreciation is $8,500 on the Building and $4,500 on the Store

Equipment.
2. The notes payable interest rate is $3,600.
3. Insurance policy is for one year, dated 1st March 2006.

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Other data:

1. Salaries expenses is 60% Selling and 40% Administrative.

2. Rent Expense, Insurance Expense and utilities expense are
50% selling and 50% administrative.
3. Repair expenses are 70% Selling and 30% Administrative.
4. $45,000 of notes payable is due for payment next year.
5. Store Equipment is used by the Selling department.
6. Building is 60% used by administrative and 40% used by
selling department.

Instructions
Prepare the multiple-step income statement and owner’s equity
statement for the year ended 31 December 2006 and a classified
balance sheet as at 31 December 2006. (26 marks)

Question 2

Easy Co. opened for business on 1 January 2006. Its trial balance
before adjustment on 31 December 2006 is:

Easy Co.
Trial Balance
31 December 2006

Debit Credit
$ $

Cash 42,500
Accounts Receivable 23,600
Supplies 5,500
Prepaid Insurance 9,800
Furniture 45,000
Accumulated Depreciation - Furniture 6,750
Accounts Payable 18,600
Unearned Revenue 8,450
Mortgage Payable 60,000
Easy Ross, Capital 12,000
Easy Ross, Drawings 5,200
Service Revenue 32,000
Salaries Expense 6,200

137,800 137,800

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Other data:
1. A count of supplies shows $1,750 supplies have been used.
2. Easy Ross paid the 1-year insurance premium on the 1 October.
3. The mortgage interest rate is 12%. (The mortgage was taken out
on 1st July.)
4. Utilities expenses of $800 are unpaid.
5. Invoices representing $5,800 of services performed during the
December have not been recorded as of 31 December.
6. $800 of the balance in the unearned service revenue account
remains unearned at the end of the 31 December.
7. Easy Co. used 5% of total accounts receivable to estimates its
bad debts expense.

Instructions
Journalize the adjusting entries that were made. Show all the
workings. No narration required. (14 Marks)

Question 3

Max Co. has been in business since 2003 and its fiscal year is 30
June. The following are the details of the assets used in his
business

Asset Cost Purchase Useful Salvage Depreciation Date Disposal

Date Life Value Method Disposed Amount
Equipment 50,000 1/1/2003 5 $7,500 Straight 30/6/2005 20,000
line

Machinery 75,000 1/7/2004 5 $12,000 Double 30/6/2006 24,000

Declining
balance

Instructions
a) Prepare a complete depreciation schedule for the Machinery,
from the date of purchased to the disposal date.(Answers to
be rounded to the nearest dollar).

b) Prepare the journal entries to record each of disposal

transactions above. Update the depreciation on assets
disposed of at the time of sale.
(19 marks)

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Question 4

The Income Statement and Balance Sheet for Apex Healthcare Berhad
for the year 2005 are as follows:

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Instructions
Compute the following ratios for Apex Healthcare Berhad (All
working must be shown):-

i) Current Ratio
ii) Inventory Turnover Ratio
iii) Profit Margin
iv) Asset Turnover
v) Return on Assets
vi) Return on Common Stockholder’s Equity
vii) Debt to Total Assets Ratio
viii) Times Interest Earned
ix) Earnings Per Share
x) Acid-Test Ratio (10 Marks)

PART C

a) Compare and contrast TWO characteristics of corporation,

partnership and proprietorship.
(6 marks)

b) Describe the difference between straight-line method,

units-of-activity method and declining-balance method of
depreciation.
(3 marks)

c) What is the difference between accrued revenues and

unearned revenues?
(2 marks)

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