Overview
- 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 02
Q.1 The Abdullah and Ahad partnership has the following plan for the distribution of partnership net income (loss):
Particulars | Abdullah | Ahad |
Salaries | 80000 | 100000 |
Bonus on Net Income | 6% | 12% |
Interest on average Capital Balance | 7% | 7% |
Remainder (if Positive Balance) | 60% | 40% |
Remainder (if Negative Balance) | 50% | 50% |
Required: Calculate the distribution of partnership net income (loss) for each independent situation below (for each situation, assume the average capital balance of Abdullah is $140,000 and of Ahad is $240,000). 1. Partnership net income is $360,000. (2 Marks) 2. Partnership net income is $240,000. (2 Marks) 3. Partnership net loss is $40,000. (2 Marks)
- On Jan, 1 2014, Peter Corp. (a U.S. based company) formed a new subsidiary in Saudi Arabia, Saeed Inc., with an initial investment of 30,000 SAR.
Assume Saeed Inc.
Purchases inventory evenly throughout 2014. The ending inventory is purchased Nov. 30, 2014.
Uses straight-line depreciation on fixed assets.
Declares and pays dividends on Nov. 30, 2014.
Purchased the fixed assets on April 1, 2014.
Uses SAR as the functional currency.
Exchange Rates are given:
Jan 1, 2014 0.260
April 1, 2014 0.255
Nov. 30, 2014 0.240
Dec. 31, 2014 0.238
Saeed’s financial statements on Dec. 31, 2014
Accounts | SAR |
Cash | 5000 |
Account Receivable | 12000 |
Inventory | 32000 |
Note Receivables | 5000 |
Plant & Equipment | 70000 |
Cost of Goods sold | 32000 |
Depreciation | 2000 |
Other Expenses | 18000 |
Dividends | 16000 |
Total Debits | 192000 |
ACC. OC – Translation Adjustment (Debit) | |
Adjusted Total Credit | |
Accumulated Depreciation | 2000 |
Account Payable | 12000 |
Bonds Payable | 36000 |
Mortgage Payable | 46000 |
Common Stock | 30000 |
Sales | 66000 |
Total Credits | 192000 |
REQUIRED
Prepare a schedule to translate Saeed’s financial statements on Dec. 31, 2014 to U.S. dollars. (6 Marks)
Q.3 Anwar and Bravo wish to form the A&B partnership. Anwar contributes land with a book value of $ 175,000 (current value of $200,000) and a building with a book value of $200,000 (current value of $300,000). Bravo will contribute cash. If the partners plan to share profits and losses equally after the formation of the partnership and assuming they have agreed to equal capital contributions, how much cash will Bravo have to contribute to form the partnership? Pass Journal entry to be recorded in A&B Firm. (3 Mark)