Question 1

XYZ Pte Ltd sells luxury watches. Among the customers are many young professionals who are at the forefront of new developments in the digital landscape. In order to reach out to these professionals and to increase the customer base of the company, the board of directors recently approved the acceptance of cryptocurrencies (e.g. Bitcoin, Ethereum, Litecoin, Ripple, etc.) as modes of payment.

As an accountant of the company, you have been instructed to recognize the cryptocurrencies as cash or record them as inventories because the company will be selling the cryptocurrencies to realize the cash. After reviewing the FRSs and the various official pronouncements, you have some reservations with the decision.

Required:

Write a memo to the Board of Directors to explain your concerns and outline the approaches to how cryptocurrencies should be accounted for. In your memo, you should also address the understanding of cash or cash equivalent, crypto-assets, digital currencies, and cryptocurrencies.

Question 2

AirCool Pte Ltd was incorporated on 1 January 20X1 to provides air-condition cleaning and maintenance services.

The followings were the transaction for the month of January 20X1:

1. 1-Jan The company issues shares for injection of $60,000 cash into the company.
2. 1-Jan The company paid $12,000 rent for six months for the office.
3. 2-Jan 1 he company bought furniture amounting to $7,500 for the office. $3,000 was paid in cash and the rest on credit.
4. 3-Jan The company purchases supplies to be used in the air-conditioning servicing. The purchase amount of $780 was owed to the supplier.
5. 4-Jan The company received $17,000 worth of equipment from an equipment supplier and issue shares for the equipment.
6. 6-Jan The company completed a job for a customer and was promptly paid $4,300for the job.
7. 13-Jan The company completed a cleaning service and billed the customer for $8,500.
8. 18-Jan The company received $2,000 from 13 January customers.
9. 23-Jan All the supplies were used up, so the company made another purchase of $900 and made payment for both the 3 January purchase and the current purchase.
10. 24-Jan The company paid salaries of $7,800 to its employees.
11. 26-Jan The company signed an agreement with a commercial unit to provide monthly cleaning and maintenance service for 1 year for an amount of $50,000 The service will commence in February. The company received an advance payment of $20,000.
12. 28-Jan The company received a utility bill for the month in the amount of $220.
13. 31-Jan At the end of the month, the company had $350 worth of the supplies remaining.

Required:

1. Analyze the above and provide journal entries/adjusting journal entries for AirCool Pte Ltd for the month of January 20X1.
2. Show the T-accounts for cash and Accounts payable
3. Prepare the trial balance of AirCool Pte Ltd as of June 30, 20X 1.
4. Prepare the necessary closing entries (journal narratives not required).
5. From the trial balance, prepare:
   • The Income Statement for the month ending 31 January 31, 20X1.
   • The Statement of Financial Position as at 31 January 31, 20X1.

Question 3

The unadjusted trial balance of Hoon Huat Pte Ltd for the year ending 31 December 20X5 was given below:

You were finalizing the accounts for the year ending 31 December 20X5. Following is a summary of the additional information for your consideration:

1. On 1 December, the company issued 400,000 new shares at$0.50 per share.
2. There were sales of $35,000 on 4 December. 20% was on credit, the rest was cash.
3. On 6 December, the company made payment of $9,000 to its suppliers on outstanding amounts.
4. On 8 December, a customer paid $3,500 to purchase goods from the company. The company had insufficient stock and only $2,100 worth of goods was delivered to the customer.
5. The company made a purchase of $23,000 on 9 December on credit but the accounting clerk recorded the purchase in the inventory account.
6. On 10 December, the company delivered an outstanding amount of goods to the customer that made the purchase on 8 December.
7. On 12 December, the company collected $1,020 from outstanding accounts of customers.
8. The company received a utility bill of $1,950 on 23 December.
9. Dividends of $50,000 were paid to stockholders on 28 December.
10. As the insurance will be expiring on 31 December, the company paid $1,200 to extend the insurance for another 12 months on 29 December.
11. The company paid an advertising fee of $4,800 on 1 June for a monthly advertisement to be featured in the local newspaper in the 3rd week of the month for 12 months.
12. The income tax for the year was computed to be $20,000.
13. The company adopts the following depreciation policy for its fixed assets:

Required:

1. Analyze the above and provide the necessary adjusting entries for the year ending 20X5.
2. After incorporating all the necessary adjustments from the additional information, prepare for Hoon Huat Pte Ltd:
   • The statement of comprehensive income.
   • The statement of financial position.

Question 4

Corporate scandals usually involved allegations of unethical behavior by people acting Within or on behalf of a corporation. The most corporate scandal involves accounting fraud of some sort. Accounting fraud can be described as the intentional misrepresentation or alteration of accounting records regarding sales, revenues, expenses, and other factors for a profit motive such as inflating company stock values, obtaining more favorable financing, or avoiding debt obligations.

Required:

Select a company listed on the Stock Exchange of Singapore (SGX). For the company you have chosen, comment on the nature of the accounting irregularities, and the effect on the corporation. What has been learned from the uncovering of this corporate scandal? Would these frauds be prevented if auditors have played their role well? Suggests ways to prevent such frauds from happening.

Pointers

• Outline the facts of the case, highlighting the financial and accounting principles, concepts, standards, etc. that were violated. Analyze and present your finding of the cause of financial fraud and the area of accounting where there were irregularities.
• Role of auditors in preventing and discovering frauds.
• Explain and recommend ways to avoid the occurrence of such incident, emphasizing the importance of accurate and reliable accounting information.