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Problem 2 The following is the unadjusted trial balance of James Co as of December 31, 2021. Account Cash FVTOCI investments Accounts rece vable AFDA Inventory Prepaid Insurance Propes Plant, ind equipment Accumulate Depreciation Patent Bank overdrant Accounts Payable Note payable Common Shares Preferred Shar Other Comprehensive Income Retained earnings Sales Debit Credit $75,000 355,000 970,000 15,000 640,000 15,000 1.150,000 220,000 218,000 8,000 198,000 100,000 750,000 200,000 60,000 770,000 2.150,000 Sales 2,150,000 Sales returns $78,000 Salary and Wages expense $98,000 Advertising expense $23,000 Cost of Goods sold $750,000 Insurance expense $62,000 Interest expense $22,000 Total $4,456,000 $4.456,000 Further information is provided below: 1) Accounts receivable ad AFDA: James Co. uses the aging method to calculate bad debt expense. The following information is provided for the balance of accounts receivables. No adjustment has seen made in AFDA since the beginning of the year: Days outstanding Amount % Uncollectible 0-30 days $550.000 4% 31-60 days 177,000 7% 61-90 days 158,000 15% Over 90 days 85,000 30% Total $970,000 2) FVTOCI investments: These investments were made during 2021 and are currently presented at their original cost of $355,000. The market value of the investment on December 31, 2021, is $455,000. 3) Cash. The current cash balance of $75,000 includes restricted cash of $10,000. The restriction period is from January 1, 2020, to December 31, 2022. 4) Bank Overdraft: The ba k overdraft of $8,000 is currently presented as a current liability the bank overdraft is in RBC, here James Co. has a chequing account with a positive balance. RBC has the legal ri nt to offset the ar unts against each other. 5) Sales: the curent amount the "Sales" account includes a cash advance of $50,000 received from a customer in December 2021. On December 31, 2021, only $15,000 of this amount was earne i by James Co. 6) The balance of prepaid ansurance includes an 18-month insurance which was purchased on May 1, 2021 7) The balance of cash acount is before preparing the bank reconciliation. The following information is provided t prepare the bank reconciliation for the month of December Cheque #107 paying a supplier $554 was incorrectly recorded by James Co. for $454. The error had not been corrected by the end of the month. The bank statement showed 7) The balance of cash account is before preparing the bank reconciliation. The following information is provided to prepare the bank reconciliation for the month of December Cheque #107 paying a supplier $554 was incorrectly recorded by James Co. for $454. The error had not been corrected by the end of the month. The bank statement showed bank charges of $40. These amounts have not been recorded by James Co. Required - 1. Record any adjusting jour al entries required in James Co Books based on the information provided above. Problem 3 Arad Inc factors $700,000 of accounts receivable with Sama Financing Inc. on a with recourse basis. Sama Financing will collect the receivables and assesses a finance charge of 3.5% of the amount of accounts receivable and also withholds on amount equal to 6.25% of accounts receivable to cover probie adjustments. The recourse obligation is estimated to be $7,000. Arad prepares financial statements using IFRS and the transfer of accounts receivable qualifies for a sale. Required- Prepare the journal entry in the books of Arad Inc. MacBook Air Problem 2 The following is the unadjusted trial balance of James Co as of December 31, 2021. Account Cash FVTOCI investments Accounts rece vable AFDA Inventory Prepaid Insurance Propes Plant, ind equipment Accumulate Depreciation Patent Bank overdrant Accounts Payable Note payable Common Shares Preferred Shar Other Comprehensive Income Retained earnings Sales Debit Credit $75,000 355,000 970,000 15,000 640,000 15,000 1.150,000 220,000 218,000 8,000 198,000 100,000 750,000 200,000 60,000 770,000 2.150,000 Sales 2,150,000 Sales returns $78,000 Salary and Wages expense $98,000 Advertising expense $23,000 Cost of Goods sold $750,000 Insurance expense $62,000 Interest expense $22,000 Total $4,456,000 $4.456,000 Further information is provided below: 1) Accounts receivable ad AFDA: James Co. uses the aging method to calculate bad debt expense. The following information is provided for the balance of accounts receivables. No adjustment has seen made in AFDA since the beginning of the year: Days outstanding Amount % Uncollectible 0-30 days $550.000 4% 31-60 days 177,000 7% 61-90 days 158,000 15% Over 90 days 85,000 30% Total $970,000 2) FVTOCI investments: These investments were made during 2021 and are currently presented at their original cost of $355,000. The market value of the investment on December 31, 2021, is $455,000. 3) Cash. The current cash balance of $75,000 includes restricted cash of $10,000. The restriction period is from January 1, 2020, to December 31, 2022. 4) Bank Overdraft: The ba k overdraft of $8,000 is currently presented as a current liability the bank overdraft is in RBC, here James Co. has a chequing account with a positive balance. RBC has the legal ri nt to offset the ar unts against each other. 5) Sales: the curent amount the "Sales" account includes a cash advance of $50,000 received from a customer in December 2021. On December 31, 2021, only $15,000 of this amount was earne i by James Co. 6) The balance of prepaid ansurance includes an 18-month insurance which was purchased on May 1, 2021 7) The balance of cash acount is before preparing the bank reconciliation. The following information is provided t prepare the bank reconciliation for the month of December Cheque #107 paying a supplier $554 was incorrectly recorded by James Co. for $454. The error had not been corrected by the end of the month. The bank statement showed 7) The balance of cash account is before preparing the bank reconciliation. The following information is provided to prepare the bank reconciliation for the month of December Cheque #107 paying a supplier $554 was incorrectly recorded by James Co. for $454. The error had not been corrected by the end of the month. The bank statement showed bank charges of $40. These amounts have not been recorded by James Co. Required - 1. Record any adjusting jour al entries required in James Co Books based on the information provided above. Problem 3 Arad Inc factors $700,000 of accounts receivable with Sama Financing Inc. on a with recourse basis. Sama Financing will collect the receivables and assesses a finance charge of 3.5% of the amount of accounts receivable and also withholds on amount equal to 6.25% of accounts receivable to cover probie adjustments. The recourse obligation is estimated to be $7,000. Arad prepares financial statements using IFRS and the transfer of accounts receivable qualifies for a sale. Required- Prepare the journal entry in the books of Arad Inc. MacBook Air

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