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about Financial Accounting
Instructions:
Use the annual report to answer the following questions:
1- What are the standards that govern the preparation of the consolidated financial statements 2015/2016?
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2- SADAFCO is a leading, world-class, Saudi Arabia-based company), what are the main activities of the Company?
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3- Go through “Auditors’ Report to the Shareholders of Saudia Dairy and Foodstuff Company (SADAFCO) ” and answer the following questions:
a. Who is responsible for the preparation of these consolidated financial statements?
b. What is the name of the independent auditor, what is his responsibility, and what are the standards that govern his audit?
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4- Identify Net Sales for the years 2015/2016 and 2014/2015. Did Net Sales increase or decrease in 2015/2016 compared with 2014/2015? Comment.
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5- Identify Net Income (Profit) for the years 2015/2016 and 2014/2015. Did Net Income (Profit) increase or decrease in 2015/2016 compared with 2014/2015. Based on this, was the year 2015/2016 better or worse than the year 2014/2015? Comment.
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6- Compute the debt ratio for SADAFCO as of March 31, 2016 and March 31, 2015. Comment on your answer.
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Part (B): Accounting Cycle Comprehensive Problem
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Arab Cleaning Service, Inc. completed the following transactions during July, 2016:
July 1 Shareholders invested $15,000 cash in the business in exchange for common stock.
1 Purchased equipment for $10,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $1,700 on account.
5 Paid $1,800 for a one-year insurance policy, effective July 1.
12 Performed cleaning services for customers on account for $4,200.
18 Paid $1,000 of amount owed on equipment, and $400 of amount owed on cleaning
supplies.
20 Paid $1,900 for employee salaries.
21 Collected $2,400 from customers billed on July 12.
25 Performed cleaning services for customers on account for $2,100.
31 Paid gasoline for the month on the equipment, $400.
31 Paid cash dividends of $500.
Adjustment data consist of:
a. Unbilled fees for services performed at July 31 were $1,300.
b. Depreciation on equipment for the month was $200.
c. Prepaid insurance expired, $150.
d. An inventory count shows $280 of cleaning supplies on hand at July 31.
e. Accrued but unpaid employee salaries were $630.
Requirements:
- Record the July transactions in the journal (Explanations are not required).
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- Post the July transactions to the ledger accounts using T-accounts.
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- Prepare a trial balance (before adjustments) at July 31, 2016.
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- Journalize and post adjusting entries.
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- Prepare an adjusted trial balance at July 31, 2016.
[3 marks]
- Prepare Arab Cleaning Service’s income statement and statement of retained earnings for
the month ended July 31, 2016, and the classified balance sheet on that date (On the income statement, list expenses in decreasing order by amount – that is, the largest expense first, the smallest expense last).
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- Journalize and post the closing entries.
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- Prepare a post-closing trial balance at July 31, 2016.
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