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17 marksRecording Financial Information

CAPE Accounting Unit 1 · 2012 · Paper 2 · Question 1(b)

Bernice Inc was incorporated on 30 November 2010. Several unrecorded transactions took place: - 15 June 2011: Issued 15 000 shares of 10 par value common stock for land (fair market value 60 000) and a building (fair market value 180 000). - 15 October 2011: Purchased 35% of the outstanding shares of 2 par value common stock of Fly Corporation for 700 000. - 30 November 2011: Fly Corporation paid a total cash dividend of 120 000. - 31 December 2011: Accrued interest on an 80 000 6-month 10% note payable taken on 01 October 2011 (no entry for the loan itself). - 31 December 2011: Retained earnings estimated at 5 million; declared a stock dividend issuing 9 000 additional $10 par shares of common stock.

Prepare journal entries with narratives to record the given transactions.

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Other parts of this question

  1. 1(a)(i)Copy and complete Table 1 comparing and contrasting the scope and objectives of the work of internal auditors for a public company with those of external…[8 marks]
  2. 1(a)(ii)Explain briefly the extent to which each type of auditor should be expected to detect fraud in a company.[4 marks]
  3. 1(c)(i)Briefly explain the term Consistency as used in IAS 1.[2 marks]
  4. 1(c)(ii)Briefly explain the term Materiality as used in IAS 1.[2 marks]
  5. 1(c)(iii)Briefly explain the term Going concern as used in IAS 1.[2 marks]

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