ACCOUNTING 1 - AA015

PSPM REINFORCEMENT SET 2

THERE ARE 30 QUESTIONS.
ANSWER ALL QUESTIONS.
TIME: 1 HOUR 30 MINUTES

Mark only one answer.

1. In preparing its August 31, 2020 bank reconciliation, Oaklah Corp. has the available following
information:
Balance per bank statement RM65,490
Deposit in transit RM10,170
Return of customer’s cheque non-sufficient RM 1,800
funds
Outstanding cheque RM 5,820
Bank service charges for August RM 350
At August 31, 2020, Oaklah’s adjusted cash balance is
A. RM59,670
B. RM59,320
C. RM69,840
D. RM61,140

2. If a cheque correctly written and paid by the bank for RM724 is incorrectly recorded on the
company's books for RM742, the appropriate treatment on the bank reconciliation would be to
A. add RM18 to the bank's balance
B. add RM18 to the book's balance
C. deduct RM724 from the bank's balance
D. deduct RM724 from the book's balance

3. If the month-end bank statement shows a balance of RM58,000, outstanding cheques are
RM15,000, a deposit of RM7,000 was in transit at month end, and a cheque for RM600 was
erroneously charged by the bank against the account, the correct balance in the bank account at
month end is
A. RM49,400
B. RM50,000
C. RM50,600
D. RM65,400

4. Notification by the bank that a deposited customer cheque was returned Non-Sufficient Fund
RM240 requires that the company make the following adjusting entry:
A Dr Accounts Receivable RM240
.
Cr Bank RM240
B. Dr Bank RM240
Cr Accounts Receivable RM240
C. Dr Miscellaneous Expense RM240
Cr Accounts Receivable RM240
D No adjusting entry is necessary
.

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5. Chocolate Chews Company gathered the following reconciling information in preparing its
August bank reconciliation:
Cash balance per books, August 31 RM15,900
Deposits in transit RM 900
Notes receivable and interest collected by RM 8,400
bank
Bank charge for cheque printing RM 120
Outstanding cheques RM12,000
NSF cheque RM 1,200
The adjusted cash balance per books on August 31 is
A. RM10,980
B. RM11,880
C. RM22,980
D. RM23,880

6. Buyo Company uses the percentage of accounts receivable method for recording bad debts
expense. For the year, cash sales are RM700,000 and credit sales are RM2,500,000. Ending
balance of account receivable is RM3,000,000. Beginning balance of allowance for doubtful debts
is RM35,000. Management estimates that 2% of accounts receivable will be uncollectible. What
is the adjusting entry to record the bad debts expense?
A. Dr Bad Debt Expense RM50,000
Cr Allowance for Doubtful Accounts RM50,000
B. Dr Bad Debt Expense RM25,000
Cr Allowance for Doubtful Debt Accounts RM25,000
C. Dr Bad Debt Expense RM25,000
Cr Accounts Receivable RM25,000
D. Dr Bad Debt Expense RM50,000
Cr Accounts Receivable RM50,000

7. An aging of a company's accounts receivable indicates that RM4,000 are estimated to be

uncollectible. If Allowance for Doubtful Debt Accounts has a RM700 credit balance, the
adjustment to record bad debts for the period will include a
A. debit to Bad Debt Expense for RM3,300
B. debit to Bad Debt Expense for RM4,000
C. debit to Bad Debt Expense for RM4,700
D. credit to Allowance for Doubtful Debt Accounts for RM700

8. A company has net credit sales of RM750,000 for the year and it estimates that uncollectible
accounts will be 3% of sales. If Allowance for Doubtful Debt Accounts has a credit balance of
RM3,000 prior to adjustment, its balance after adjustment will be a credit of
A. RM19,500
B. RM22,500
C. RM22,560
D. RM25,500

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9. Maine Corporation’s unadjusted trial balance includes the following balances (assume normal
balances):
Accounts Receivable RM850,000
Allowance for Doubtful Debt RM 18,000
Accounts
Bad debts are estimated to be 5% of outstanding receivables.
What amount of bad debt expense will the company record?
A. RM18,000
B. RM24,500
C. RM41,600
D. RM42,500

10. Jill Company provides for bad debt expense at the rate of 3% of credit sales. The following
data are available for 2019:
Beginning balance of Allowance for doubtful debt accounts RM15,000
Accounts receivable written off as uncollectible during RM9,000
2019
Credit sales in 2019 RM1,000,000
Ending balance of Allowance for Doubtful Debt Accounts should be
A. RM45,000
B. RM24,000
C. RM30,000
D. RM36,000

11. Quayle Bookstore had 500 units on hand at January 1, costing RM9 each. Purchases and sales
during the month of January were as follows:
DATE TRANSACTIONS UNIT COST/PRICE PER UNIT
S
Jan 14 Sales 380 RM15
17 Purchases 250 RM10
25 Purchases 250 RM12
29 Sales 260 RM17
Quayle does not maintain perpetual inventory records. According to a physical count, 360 units
were on hand at January 31. The cost of the inventory at January 31, under the FIFO method is:
A. RM3,240
B. RM3,650
C. RM4,100
D. RM3,820

12. Bud's Place recorded the following data:

DATE TRANSACTIONS UNIT COST/PRICE PER UNIT
S
Jan 1 Inventory 500 RM2.40
8 Purchases 1,000 RM3.00
12 Sales 1,200
The weighted average unit cost of the inventory at January 31 is:
A. RM2.40
B. RM2.70
C. RM2.80
D. RM3.40

13. A company just starting business made the following four inventory purchases in June.
DATE UNITS TOTAL COST
June 1 150 RM390

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 10 200 RM598
15 200 RM630
28 150 RM510
Total purchase RM2,128. A physical count of merchandise inventory on June 30 reveals that there
are 200 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods
sold for June is
A. RM540.50
B. RM668.50
C. RM1,460.50
D. RM1,588.50

14. A company just starting business made the following four inventory purchases in June.
DATE UNITS TOTAL COST
June 1 150 RM390
10 200 RM598
15 200 RM630
28 150 RM510
Total purchase RM2,128. A physical count of merchandise inventory on June 30 reveals that there
are 200 units on hand. Using the AVERAGE-COST method, the amount allocated to the ending
inventory on June 30 is
A. RM540
B. RM608
C. RM668
D. RM1,520

15. At May 1, 2021, Bibby Company had beginning inventory consisting of 200 units with a unit cost
of RM7.00. During May, the company purchased inventory:
800 units at RM7.00
500 units at RM9.00
The company sold 500 units during the month for RM12.00 per unit. Bibby uses the weighted
average method. Bibby's gross profit for the month of May is (round-off the cost per unit to 2
decimal places)
A. RM2,000
B. RM1,500
C. RM2,170
D. RM4,333

16. On May 1, 2017, Pinkley Company sells office furniture for RM300,000 cash. The office
furniture originally cost RM750,000 when purchased on January 1, 2010. Depreciation is
recorded by the straight-line method over 10 years with a salvage value of RM75,000. What gain
should be recognized on the sale? (the company uses yearly basis)
A. RM22,500
B. RM45,000
C. RM47,500
D. RM90,000

17. A truck costing RM110,000 was destroyed when its engine caught fire. At the date of the fire, the
accumulated depreciation on the truck was RM50,000. An insurance cheque for RM125,000 was
received based on the replacement cost of the truck. The entry to record the insurance proceeds
and the disposition of the truck will include a
A. Gain on Disposal of RM15,000
B. credit to the Truck account of RM60,000
C. credit to the Accumulated Depreciation account for RM50,000
D. Gain on Disposal of RM65,000

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18. A company exchanges its old office equipment of RM80,000 for new office equipment. The old
office equipment has a book value of RM56,000, a trade in value of RM40,000 on the date of the
exchange and cash payment RM80,000. The cost of the new office equipment would be recorded
at
A. RM136,000
B. RM120,000
C. RM96,000
D. cannot be determined

19. Presto Company purchased equipment and these costs were incurred:
Cash price RM65,000
Sales taxes RM3,600
Insurance during transit RM640
Installation and testing RM860
Presto will record the acquisition cost of the equipment as
A. RM65,000
B. RM68,600
C. RM69,240
D. RM70,100

20. A company purchased factory equipment for RM700,000. It is estimated that the equipment will
have a RM70,000 salvage value at the end of its estimated 5-year useful life. If the company uses
40% rate for the reducing balance method of depreciation, the amount of annual depreciation
recorded for the second year after purchase would be
A. RM280,000
B. RM168,000
C. RM252,000
D. RM120,960

21. A cash register tape shows cash sales of RM3,000 and sales taxes of RM240. The journal entry to
record this information is
A. Dr Cash RM3,240
Cr Sales Revenue RM3,240
B. Dr Cash RM3,240
Cr Sales Taxes RM 240
Payable RM3,000
Sales Revenue
C. Dr Cash RM3,000
Sales Tax Payable RM 240
Cr Sales Revenue RM3,240
D. Dr Cash RM3,240
Cr Sales Tax Revenue RM 240
Sales Revenue RM3,000

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22. Watunga County Bank agrees to lend Hoffman Granite Company RM600,000 on January 1.
Hoffman Granite Company signs a RM600,000, 8%, 9-month notes payable. What entry will
Hoffman Granite make to pay off the notes payable and interest at maturity?
A Dr Notes Payable RM636,000
.
Cr Bank RM636,000
B. Dr Notes Payable RM600,000
Dr Interest Payable RM 36,000
Cr Bank RM636,000
C. Dr Notes Payable RM600,000
Dr Interest Expense RM 36,000
Cr Bank RM636,000
D Dr Notes Payable RM600,000
. Dr Interest Payable RM 24,000
Dr Interest Expense RM 12,000
Cr Bank RM636,000

23. Lulu Luxuries Company issued a four-year interest-bearing notes payable for RM200,000 on
January 1, 2019. Each January the company is required to pay RM50,000 of the notes payable.
How will this notes payable be reported on the December 31, 2020 Financial Position Statement?
A. Non-Current Liability: Notes payable RM150,000
B. Non-Current Liability: Notes payable, RM200,000
C. Non-Current Liability: Notes payable RM100,000, Current Liability: Notes payable RM50,000
D. Non-Current Liability: Notes payable, RM150,000, Current Liability: Notes payable
RM50,000

24. On January 1, 2020, Meeks Corporation issued RM5,000,000, 10-year, 4% bonds. Interest is
payable annually on January 1. Accounting period ends every 31 December. The journal entry to
record this transaction on January 1, 2021 is
A. Dr Bonds payable RM200,000, Cr Bank RM200,000
B. Dr Interest payable RM200,000, Cr Bank RM200,000
C. Dr Bank RM5,000,000, Cr Bonds Payable RM5,000,000
D. Dr Interest expense RM200,000, Cr Interest payable RM200,000

25. Norton Company purchased a building on January 2, 2021 by signing a long-term RM480,000
mortgage with monthly payments of RM4,500. The mortgage carries an interest rate of 10
percent. The balance of principal owned on the mortgage after the first payment will be
A. RM475,500
B. RM476,000
C. RM479,500
D. RM480,000

26. What is the amount of capital of the Munif Trading if assets are RM85,000 and liabilities are
RM21,000?
A. RM 21,000
B. RM 64,000
C. RM 85,000
D. RM 106,000

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27.
Beginning balance of accounts RM 30,000
receivable
Cash received RM100,000
Credit sales RM 90,000
Ending balance of accounts receivable is
A. RM 20,000
B. RM 30,000
C. RM 40,000
D. RM 130,000

28. A firm's capital at the beginning of a year was RM16,500 and its capital at the end of the was
RM11,350. The proprietor's drawings during the year totalled RM3,300 and no additional capital
was introduced. The firm's profit or loss for the year was:
A. Loss of RM1,850
B. Profit of RM1,850
C. Loss of RM8,450
D. Profit of RM8,450

29. In addition to its trading activities a business earns substantial amounts as rent. Rent received
during 2019 was RM54,800. Identify the rental income it should report in its Statement of Profit
or Loss for the year 2019. The rent received in advance as at 31st December, 2018 and 2019 were
RM9,800 and RM5,400 respectively.
A. RM39,600
B. RM50,400
C. RM59,200
D. RM70,300

30. Find out credit sales from the following information: Accounts Receivable on 1st January 2019
was RM40,000, Cash received from accounts receivable was RM100,000, Sales Discount was
RM5,000, Sales returns was RM2,000, and Accounts receivable on 31st December 2019 was
RM25,000.
A. RM85,000
B. RM87,000
C. RM92,000
D. RM122,000

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END OF QUESTION PAPER