EMBA Accounting Assignment: Adjusting Entries & Financial Statements

This accounting assignment solution addresses various aspects of adjusting entries, closing processes, and the preparation of financial statements for Markham Industries. It includes detailed calculations and explanations for accrued revenues and expenses, deferred revenues and expenses, depreciation, insurance, and rent. The solution also presents balance sheet and income statement excerpts, earnings per share (EPS) calculation, cash flow statement preparation, sales revenue analysis, implicit interest rate determination in sales discounts, bad debt expense accounting, and inventory valuation using FIFO, LIFO, and average cost methods. The assignment provides a comprehensive overview of key accounting principles and their practical application in financial reporting.

Running head: ACCOUNTING
Accounting
Name of the Student
Name of the University
Author Note

1ACCOUNTING
Table of Contents
Answer to Question 1...................................................................................................................2
Answer to Question 2...................................................................................................................2
Answer to Question 3...................................................................................................................3
Answer to Question 4...................................................................................................................4
Answer to Question 5...................................................................................................................5
Answer to Question 6...................................................................................................................6
Answer to Question 7...................................................................................................................6
Answer to Question 8...................................................................................................................7

2ACCOUNTING
Answer to Question 1
a Accrued Revenue
b Deferred Expense
c Deferred Expense
d Deferred Revenue
e Accrued
Expenditure
f Deferred
Expenditure
g Accrued
Expenditure
Particulars Amount Amount
a Rent Expenses 1280
Rent Payable 1280
(Accrued Rent)
b Depreciation 14100
Equipment 14100
(Depreciation charged on equipment)
c Insurance expense 345
Prepaid Insurance 345

3ACCOUNTING
(Prepaid Insurance written off for 6
months)
d Unearned Rent Revenue 3000
Rent Revenue 3000
(Accrued Rent)
e Accounts Receivable 750
Repair Shop Revenue 750
(Revenue not recorded)
f Wages 2750
Wages Payable 2750
(Accrued Wages)
g Office Supplies expenses 725
office supplies 725
(Office supplies Expenses)
Answer to Question 2
Selected Balance Sheet Accounts
at December 31, 2019
Amount to
Be Reported

4ACCOUNTING
Assets
Equipment $16000
Accumulated depreciation 1500
Net book value of equipment 14500
Office supplies 450
Prepaid insurance 630
Selected Income Statement Accounts
for the Year Ended December 31, 2019
Expenses
Depreciation expense $1500
Office supplies expense 1350
Insurance expense 210
Answer to Question 3
a)

5ACCOUNTING
Particulars Amount (Dr.) Amount (Cr.)
Insurance Expense 400
Prepaid Insurance 400
(Insurance expense incurred during the year)
Depreciation 5500
Accumulated Depreciation 5500
(Increase in accumulated depreciation during the year)
Accounts Receivable 300
Service Revenue 300
(Services provided but revenue not received yet)
Wages expense 100
Wages Payable 100
(Wages accrued but not paid during the year)
b)
Service Revenue 38300
Wage Expense 100
Depreciation Expense 5500
Insurance Expense 400
Net Income during the year 32300
c)
Net Income 32300
Number of Shares Outstanding 1000
EPS 32.3

6ACCOUNTING
Answer to Question 4
Particulars Amount Amount
Cash Flow from operating activities:
Net Income $
32,000
Decrease in Accounts Payable $
(2,000)
Decrease in Inventory $
1,500
Increase in accounts receivable $
(7,000)
Net Cash flow from Operating
activities
$
24,500
Cash Flow from Investing activities:
Land Purchased $
(31,900)
New delivery truck purchased for cash $
(10,000)
Net Cash flow from Investing activities $
(41,900)
Cash Flow from Financing Activities:
Cash borrowed on a three-year note $

7ACCOUNTING
40,000
Stock issued for cash $
29,000
Net Cash Flow from Financing
Activities
$
69,000
Net Cash Flow during the year $
51,600
Add: Beginning Cash Balance $
27,000
Ending Cash Balance $
78,600
Answer to Question 5
Particulars Amount Amount
Sales made to Customer A $
6,500
Sales made to Customer B $
600
Visa credit card charges $
12
Total sales revenue to B $

8ACCOUNTING
612
Sales made to Customer C $
11,000
Less: Returns by Customer C $
(1,100)
Net Sales for the two months
ended
$
17,012
Answer to Question 6
Implicit Interest in the Sales Discount = [Discount Rate/1-Discount Rate]*[365/Credit
period – Discount Period]
Here, the implicit interest in the sales discount is 30.42%.
Yes, the customer should borrow from the bank as he can get a discount of 30% while paying an
interest of only 15% to the bank. He is at an advantage.
Answer to Question 7
Particulars Amount Amount
a) Bad Debts Expense account $
17,580
Provision for bad debts account $
17,580
(Creation of 2% provision for

9ACCOUNTING
debtors)
b) Bad Debts Expense account $
436
Personal account of debtors $
436
Answer to Question 8
FIFO LIFO Average
Cost
Ending Inventory 285000 248000 401400
Cost of Goods Sold 384000 421000 267600