Financial Accounting

College of Administrative and Financial Sciences

Assignment (1)

Deadline: Saturday

Course Name: Financial AccountingStudent’s Name:
Course Code: ACCT201Student’s ID Number:
Semester: First Term CRN:
Academic Year: 1445 H

For Instructor’s Use only

Instructor’s Name:

Students’ Grade:          /15                         Level of Marks: High/Middle/Low

   The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.

        Assignments submitted through email will not be accepted.

   Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.

        Students must mention question number clearly in their answer.

         Late submission will NOT be accepted.

   Avoid  plagiarism,  the  work  should  be  in  your  own  words,  copying  from students  or  other  resources  without  proper  referencing  will  result  in  ZERO marks. No exceptions.

        All answers must be typed using Times New Roman (size 12, double-spaced)

font.  No  pictures  containing  text  will  be  accepted  and  will  be  considered plagiarism.

        Submissions without this cover page will NOT be accepted

Assignment Question(s):                                                    (Marks: 15)

Question 1:                                                                            (4 Marks)

List and discuss the characteristics of the International Accounting Standards Board (IASB) that reinforced the importance of an open, transparent and independent process.

Answer to Q1:

Question 2:                                                                           (4 Marks)

Khaled Corporation’s capital structure consists of 50,000 ordinary shares. At December 31, 2022 an analysis of the accounts and discussions with company officials revealed the following information:

            Sales                                                                                                          SAR1,100,000

            Purchase discounts                                                                                                 18,000

            Purchases                                                                                                             642,000

            Loss on discontinued operations (net of tax)                                                         42,000

            Selling expenses                                                                                                  128,000

            Cash                                                                                                                       60,000

            Accounts receivable                                                                                               90,000

            Share capital                                                                                                        200,000

            Accumulated depreciation                                                                                   180,000

            Dividend revenue                                                                                                     8,000

            Inventory, January 1, 2011                                                                                  152,000

            Inventory, December 31, 2011                                                                            125,000

            Unearned service revenue                                                                                        4,400

            Accrued interest payable                                                                                         1,000

            Land                                                                                                                     370,000

            Patents                                                                                                                  100,000

            Retained earnings, January 1, 2011                                                                     290,000

            Interest expense                                                                                                     17,000

            General and administrative expenses                                                                  150,000

            Dividends declared                                                                                                29,000

            Allowance for doubtful accounts                                                                             5,000

            Notes payable                                                                                                      200,000

            Machinery and equipment                                                                                   450,000

            Materials and supplies                                                                                           40,000

            Accounts payable                                                                                                   60,000

The amount of income taxes applicable to ordinary income was SAR48,600, excluding the tax effect of the discontinued operations loss, which amounted to SAR18,000.

Instructions

(a)  Prepare an income statement. (2 marks)

(b)  Prepare a retained earnings statement. (2 marks)

Answer to Q2:

Question 3:                                                                                   (4 Marks)

The following trial balance was taken from the books of ALHANA Company on December 31, 2022.

            Account                                                                                        Debit                 Credit     

Cash                                                                                                 SAR  12,000

Accounts Receivable                                                                                 40,000

Note Receivable                                                                                           7,000

Allowance for Doubtful Accounts                                                                               SAR   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

Sales                                                                                                         280,000               

Cost of Goods Sold                                                                                  111,000

Salaries Expense                                                                                        50,000

Rent Expense                                                                                             12,800                             

         Totals                                                                                      SAR406,600      SAR406,600

At year-end, the following items have not yet been recorded.

 a.    Insurance expired during the year, SAR2,000.

 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, SAR5,400 (originally charged to expense).

 f.    Accrued salaries at December 31, SAR5,800.

Instructions

(a)  Prepare the necessary adjusting entries. (2 marks)

(b)  Prepare the necessary closing entries. (2 marks)

Answer to Q3: