LAMS

1.

2.
3.
Class discussion
Seminar 1

I don’t understand what is the gain and loss options, is it the decrease or the increase in each of the
classification?

 Gain or loss is similar to revenue and expense in income statement except the difference in
the nature of transactions. That is, Gains/Losses arise from activities that are not part of
typical, routine, day-to-day operations and are not transactions with owners. If an activity is
unusual or infrequent, typical the resulting transaction is considered a gain or loss.

1. Liabilities (Correct)
2. Assets (Correct)
3. Assets (Correct)
4. Assets (Correct)
5. Assets (Incorrect)  Expense (see the income statement)

6. Its in both revenue and expense (Incorrect)  Try again by searching through the Singapore
Airlines’ annual report.  Assets YES!
7. Assets (Incorrect)  Try again by searching through the Singapore Airlines’ annual report. 
Liabilties YES!
8. Decrease in Asset (Trade debtors are asset; however, I am not sure how you got “decrease in
asset.” Note that “Trade debtors = Accounts Receivable = Trade receivables”)
9. Assets (Correct)
10. Liabilities (Correct)
11. Assets (Correct)
12. Assets (Correct) classify as subsidiary companies if the firm’s ownership is greater than 50%.
For example, Singapore Airline owns the 100% shares of Scoot airline.
13. Revenue (Incorrect) Revenue and gain is different. Please read the explanation on the top.
Gain GREAT!
14. Revenue (Incorrect)  Try again. Gain GREAT!
15. Increase Shareholder’s Equity  I assume this is going to revaluation reserve. (impairment of
impairment of PPE) (Incorrect)  Impairment is an expense.
16. Assets (Correct)
17. Assets (Correct)
18. Expense (Correct)
19. Assets (Correct) classify as associated companies if the firm’s ownership is greater than 20%
but less than 50%
20. Expense (Correct)
21. Assets (Correct)
22. Expense (Correct)
23. Reduce Equity (Correct) (Stockholder’ Equity) (SE): note that I purposely put the parenthesis
to indicate it would reduce stockholders’ equity. This account is called Contra Equity account.
“Contra” means “against.” For your reference, repurchased stock is called treasury stock
24. Expense (Correct)
25. Equity (Correct)  Share capital = Contributed capital = Common Stock
26. Liabilities (Correct)
27. Revenue (Correct)
28. Equity (Correct)  General Reserve = Unappropriated profit = Retained earnings
29. Liabilities (Correct)
30. Liabilities (Correct)
31. Equity (Correct)  For your reference (it will be covered in later class), non-controlling
interests (NCI, used to be called “minority interest) is the amount of equity investment made
by outside shareholders to consolidated subsidiaries that are not 100% owned by the parent
but less than 50% owned
SMRT

i. (Correct)

Asset =
Liabilities + Equity
1,805,77 914,24
2,720,022 = +
5 7
ii. (Correct)

Vision: Moving People, Enhancing Lives (from FY2016 FS)

to be the people’s choice by delivering a world-class transport service and lifestyle
Mission:
experience that is safe, reliable and customer-centric (from the FY2016 FS)
iii. (Correct)

2016 2015
108,27 90,45 Increas
5 4 e
iv. (Correct)

Dividend/shar
e
$2.50 Note 28

Decrease Asset and Equity, no change to liabilities

 Cash (↓ by $38,096,297) and Accumulated Profits (↓ by $38,096,297)

v. (Correct)

a Account affected Account affected

Debit: Loans Credit: Cash
Transaction details: Loan repayment
b Account affected Account affected
Debit: Cash Credit: Loans
Transaction details: Issue of unsecured notes
c Account affected Account affected
Debit: Inventories Credit: Cash
Transaction details: Inventory purchases or
Purchase & disposal of property, plant and
equipment or cash received from trade
receivables or prepayments
d Account affected Account affected
Debit: Receivables Credit: revenue
Transaction details: Sales of flights
e Account affected Account affected
Debit: PPE Credit: Revaluation Reserve
Transaction details: Upwards Revaluation of PPE
Or
Proceeds from issue of shares
 vi. (Correct)

Audited:
Yes By: PWC
Provide reasonable assurance to stakeholders of the company
Value of that the financial statement is free from material
Audited misstatements. The Audit opinion concludes the audit's view
Financial of SMRT FS, that is it is a true and fair view of the financial
Statements position of the Group and Company as of year end
Seminar 2

Accoun Normal
ts Balance
Debit
(Correct
1 )
Debit
(Correct
2 )
Credit
(Correct
3 )
Debit
(Correct
4 )
Debit
(Correct
5 )
Credit
(Correct
6 )
Debit
(Correct
7 )
Credit
(Correct
8 )
Debit
(Correct
9 )
Debit
(Correct
10 )
Credit
(Correct
11 )
Debit
(Correct
12 )
Credit
(Correct
13 )
Debit
(Incorre
ct – see
the
14 below)
Debit
(Correct
15 )
 Credit
(Correct
16 )
Credit
(Correct
17 )
Debit
(Correct
18 )
Debit
(Correct
19 )
Credit
(Correct
20 )

For Q1-14:

 Under Trade and other payables (p. 217)

 Liability (like Unearned Revenue)  CREDIT

See below for Questions 2 and 3:

 D
03-May r Accounts Payable 3,000
Cr Cash 3,000

D
04-May r Inventory 5,000
Cr Cash 5,000

D
06-May r Cash 2,450
Cr Accounts Receivable 2,450

D
07-May r Cash 3,000
D
r Accounts Receivable 2,000
Cr Revenue 5,000

D
r COGS 3,850
 Cr Inventory 3,850

D
08-May r Cash 4,000
D
r Accounts Receivable 2,500
Cr Land 6,500

D
15-May r Notes Payable 2,500
Cr Cash 2,500

D
21-May r Cash 1,000
Cr Capital Stock 1,000

D
23-May r Cash 3,750
Cr Revenue 3,750

D
r COGS 2,000
Cr Inventory 2,000

D
25-May r COGS 1,000
Cr Cash 1,000

D
26-May r Rental Expense 250
Cr Cash 250

D
29-May r Furniture 250
Cr Cash 250

Debit Credit
Cash 7,250 -
Accounts Receivable 4,500 -
Inventory 7,150 -
Land 6,500 -
Building 12,000 -
Furniture 2,250 -
Notes Payable - 10,000
Accounts Payable - 3,000
Capital Stock - 16,000
Retained Earnings - 9,000
Revenue - 8,750
COGS 6,850 -
Rental Expense 250 -
46,750 46,750
Before you make the trial balance, please transfer the journal entries into T-
accounts in the format below. Then record the ending balances into the trial
balance.

Also, please try requirement 4.

 Requirement 4: The manager of Jethro Company asks you

 (1) how much in total resources the business has to work with
 44,650 (I sum up all the assets)
 (2) how much it owes
 44,650 owed to both shareholders and creditors
 (3) whether May was profitable (and by how much)
 It is profitable as there is a 15,850 profit
 (4) determine the Retained Earnings balance as at May 31, 2012
after closing the books.
 The retained earnings are 24,850
 Debit Credit
Cash 19,000 -
Mortgage Payable - 75,200
Advertising Expense 9,600 -
Capital Stock - 110,000
Equipment 36,900 -
Notes Payable - 197,350
Inventory 142,000 -
Wages Expense 87,900 -
Notes Receivable 12,000 -
Accounts Payables - 23,450
Accounts Receivable 5,300 -
Rent Expense 8,750 -
Wages Payable - 12,000
Furniture 18,000 -
Other Expense 1,950 -
Sales Revenue - 225,600
Buildings 110,700 -
COGS 113,650 -
Property Tax Expense 1,300 -
Land 95,850 -
Retained Earnings - 21,400
Utilities Expense 2,100 -
665,000 665,000
 You could have order them in Assets, Liabilities and Shareholders’’ Equities as the
following:

 Also please think about the requirement 4:

o What is Profit for the year ended November 30, 2012?

Seminar 3
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