Answers of Accounting Questions
Answer of Question #1:
Load will be availed for = $100.000
Compensatory Balance = $15,000
Load = 85,000
Interest 100,000 @ 12% = 12000
Effective Inetrest = 12000/85000 * 1000 = 14.11%
--------------------------------------------------------------------------
Answer of Question 2:
1 - Copy of memorandum of association of the company.
2- Copy of Articles of association of the company.
3- Terms of engagement (audit engagement letter).
4- Company's structure / profile / nature of concern.
--------------------------------------------------------------------------
Answer of Question #3
1- Whether these receivable belongs to the company under review.
2- Probability of recovery.
3- Aging of accounts receivable.
--------------------------------------------------------------------------
Answer of Question #4
a: Prepare entries to record the issue of the note:
Bank a/c 80,000
Short term load 80,000
b: Assume that at the end of each month High Company recorded in its books of accrual of interest. Prepare month and entries:
Interest for december 80000 * 9.5 % * 62/345 = 645
interest for january 80000 * 9.5 % * 31/365 645
interest for feb 80000* 10.25 * 28/365 = 965
31-12 interest a/c 645
Interest payable 645
31-01 interest a/c 645
interest paybale a/c 645
c: Show entries for the check issued on the first maturity date
Interest payable a/c 1290
To bank a/c 1290
D: Show entries for the check issued at the second maturity date
28-02 Interest a/c 629
To Interest Payable a/c 629
28-02 Short term loan a/c 80,000
Interest payable a/c 629
To Bank a/c 80629
--------------------------------------------------------------------------
Last edited by Shooting Star; Thursday, April 05, 2012 at 11:37 PM.
|