No.

1:
a. The relative significance of a company’s receivables as a percentage of its assets
depends on various factors; its industry, the time of year, whether it extends
long-term financing, and its credit policies. To reflect important differences
among receivables, they are frequently classified as three types of receivables.
Mention and explain the three types of receivables and give an example
according to your business project!

b. In valuing account receivables, there are two methods used in accounting

for uncollectible accounts, describe and explain! Which method do you
think is the best? Explain your opinion!

c. Itaewon Corp has the following transactions related to notes receivable

during the last 2 months of 2020.
Oct. 1 Loaned $10,000 cash to Mr. Park on a 1-year, 9 % note
Nov 1 Sold goods to Uncle Inc., receiving a $8,000. 90 days, 7% note
Dec. 1 Received a $ 7,000, 6-month, 9% note in exchange for Rick De Long’s
outstanding account receivable.
Dec. 31 Accrued interest revenue on all note receivable
Instructions:
1. Journalize the transactions for Itaewon Corp.
2. Record the collection of the Mr. Park note at its maturity in 2021.

No.2:
a. Depreciation for plant assets generally computed using three following
methods, describe and explain!
b. Karma Farming sells equipment on August 31 2020, for $20,000 cash. The
equipment originally cost $60,000 and as of January 1, 2020, had accumulated
depreciation of $38,000. Depreciation for the first 8 months of 2020 is $6,000.
Instructions:
Prepare the journal entries to (a) update depreciation to August 31, 2020 and (b)
record the sale of the equipment.

No. 3:
a. Many years ago, a noted scholar defined a corporation as “an artificial being,
invisible, intangible, and existing only in contemplation of law.” This definition
is the foundation for the prevailing legal interpretation in many countries that a
corporation is an entity separate and distinct from its owners. A number of
characteristics distinguish corporation from proprietorships and partnerships.
Explain the characteristics of a corporation!

b. Sandbox SA is authorized to issue 1,000,000 $5 par value ordinary shares. In

its first year, the company has the following share transactions.
Jan. 10 Issued 400,000 ordinary shares at $8 per share
July 1 Issued 100,000 ordinary shares for land. The land had an asking price of
$900,000. The shares are currently selling on a national exchange at $8.25 per
share.
Sept 1 Purchased 10,000 ordinary shares for the
treasury at $9 per share Dec 1 Sold 4,000
treasury shares at $10 per share
Instructions: Journalize the transactions.

No. 4
a. The statement of cash flows reports the cash receipts, cash payment, and net
change in cash resulting from operating, investing, and financing activities
during a period. Explain the usefulness of the Statement of Cash Flows!

b. Covey AG’s comparative statements of financial position are presented below

Covey AG
Comparative Statements of Financial Position
December 31
Amount in $ Amount in $
2020 2019
Investment 23.000 16.000
Equipment 60.000 70.000
Accumulated Depreciation-Equipment - 14.000 - 10.000
Account Receivable 24.200 22.300
Cash 28.200 17.700
Total 121.400 116.000

Ordinary Shares 60.000 45.000

Retained Earnings 31.800 29.900
Bonds Payable 10.000 30.000
Accounts payable 19.600 11.100
121.400 116.000
Additional information:
1. Net Income was $28,300. Dividends declared and paid were $26,400
2. Equipment which cost $10,000 and had accumulated depreciation of $1,200 was
sold for
$4,300
3. All other changes in non-current account balances had a direct effect on
cash flows, except the change in accumulated depreciation.
Instruction: Prepare a statement of cash flows for 2020 using the indirect method.

No. 5:
a. We use various tools to evaluate the significant of financial statements data.
Describe and explain the three commonly used tools!
b. The comparative condensed statement of financial position of Davinci Ltd. are
presented as follows: Davinci Ltd
Condensed Statement
 of Financial Position
December 31
(in thousands)

2020 2019
Assets
Intangibles $25,000 $40,000
Property, plant, and Equipment (net) $99,000 $90,000
Current assets $76,000 $80,000
Total Assets $200,000 $210,000

Equity and Liabilities

Equity $16,200 $12,000
Non-current liabilities $143,000 $150,000
Current liabilities $40,800 $48,000
Total Equity and Liabilities $200,000 $210,000

Instructions
Prepare a horizontal analysis of the statement of financial position data for Davinci
Ltd using 2019 as base.
Prepare a vertical analysis of the statement of financial position data for Davinci
Ltd in columnar form for 2020.
1. Define and explain the four types of unemployment. Which is the hardest to deal with and
why?

2. Briefly explain what methods the Central Bank applies in setting interest rates to target
inflation?

3. Name and explain the four basic monetary policies that central banks can do to address
deflation!

4. Complete and display the following illustration table calculations:

Year Nominal Interest Rate Inflation Rate Real Interest Rate

2017 6,5% 3,9% …
2018 … 4,7% 5%
2019 … 7,3% 6,1%
2020 14% 7% …