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Mid Trimester Test Template
TRIMESTER 1 2020 FINAL EXAMINATION
    STUDENT ID
    
    STUDENT NAME
    
SUBJECT NAME:        Principles of Accounting
SUBJECT CODE:        BAP11
TIME ALLOWED:        3 hours
PERMITTED MATERIALS:
    
· This is an Open Book exam.
INSTRUCTIONS FOR STUDENTS:
· You do not require a separate answer booklet. Please type your responses in the space provided.
· Type your full name and ID at the top of this page.
· This examination consists of SEVEN compulsory questions.
Question 1 (25 marks)
The financial statements of Sierra Ltd are presented as follows:
    Sierra Ltd
    
    Statement of Financial Position as at 31 Dec 2016
    
     
    $
    $
    Changes Increase/ Decrease
     
    2016
    2015
    
    Assets
    
    
    
    Cash
     55 000
     38 000
    17 000 Increase
    Accounts receivables
    69 000
    27 000
    42 000 Increase
    Inventory
    55 000
    ----
    55 000 Increase
    Prepaid expensed
     5 000
     7 000
     2 000 Decrease
    Land
    46 000
    71 000
     25 000 Decrease
    Equipment
    194 000
    69 000
     125 000 Increase
    Accumulated depreciation – equipment
    (29 000)
    (11 000)
    18 000 Increase
    Total
     395 000
     201 000
    
     
     
     
    
    Liabilities and equity
    
    
    
    Accounts payable
     24 000
     41 000
    17 000 Decrease
    Accrued expense payable
     11 000
    ----
    11 000 Increase
    Convertible notes payable
    111 000
    151 000
     40 000 Decrease
    Share capital
    220 000
     60 000
    160 000 Increase
    Retained earnings
    206 000
    136 000
    70 000 Increase
     Total
     572 000
    388 000
    
    Sierra Ltd
    
    Statement of Profit or Loss
    
    for year ended 31 Dec 2016
    
    
    $
    $
    Sales
    
     885 000
    Cost of sales
    460 000
    
    Operating Expense
    220 000
    
    Interest expense
     15 000
    695 000
    Profit before tax
    
    190 000
    Income tax expense
    
     70 000
    Profit
    
     120 000
Additional information:
· Operating expenses include depreciation expense of $35 000.
· Cash dividends of $55 000 were declared and paid in 2016.
· Interest expense of $12 000 was paid in cash.
· Land was sold at its carrying amount for cash in 2016.
· During 2016, equipment with a cost of $170 000 was purchased for cash. Equipment with a cost of $40 000 and carrying amount of $35 000 was sold.
· In 2016, convertible notes of $15 000 were redeemed at their carrying amount for cash; convertible notes of $30 000 were converted into ordinary shares issued at $30 000 in total.
· Ordinary shares were issues for $120 000 in cash during 2016.
Required:
Prepare a statement of cash flows using the direct method. Show workings. (25 marks)
Cash flow statement using the direct method:
Sierra Ltd
Statement of Cash Flows
for the year ended 31 Dec 2016
    Cash flows from operating activities:
    
    
     Sales
    885,000
    885,000
     Cash
     55,000
    38,000
     Inventory
     55,000
    0
    [Land
    [46,000
     [71,000
    
    
    
    
    
    
    
    
    
    Net cash 620,000 by operating activities
     729000
     109000
    
    
    
    Cash flows from investing activities:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash by investing activities
    
    
    
    
    
    Cash flows from financing activities:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash by financing activities
    
    
    
    
    
    Net in cash
    
    
    Cash at beginning of period
    
    
    Cash at end of period
    
    
    
    
    
    Non-cash investing and financing activities
    
    
    
    
    
[Show workings]

    
Question 2 (20 marks)
Selected Petrillo Ltd. 2017 and 2016 figures and 2016 ratios are presented as follows:
     
    PETRILLO 2017
    PETRILLO 2016
     
    US$M
    US$M
    Net credit sales
    66 415
    65 492
    Profit after tax
    6 787
    6 214
    Profit...