Oct. 3: Summit Trail paid $1,200 cash for freight on the Oct. 2 inventory purchase. The company uses a perpetual inventory system. Which journal entry should be recorded?

Formula: Inventory turnover = Cost of goods sold ÷ Average inventory. A wholesaler’s inventory turnover fell from 8.0 times to 4.5 times. Which interpretation is most appropriate?

Maple Ridge Services Ltd. is preparing the assets section of its statement of financial position. Match each account with the correct classification.

Westbridge Consulting Ltd. is a service company that provides business advisory and project management services to clients. During May, the company completed several regular operating transactions. No adjusting entries are required. Match each transaction with the correct journal entry.

Actual results from the current year help users evaluate whether last year’s forecasted income was reasonable. Which qualitative characteristic is being used?

Instructions:    1. Review the Income Statement, Statement of Changes in Equity, and Statement of Financial Position above.    2. Identify at least 10 errors in the financial statements.    3. For each error found, describe what is wrong and provide the correct treatment or amount.    4. Errors may include: calculation mistakes, classification errors, presentation errors, or conceptual errors.    5. Each correctly identified and explained error is worth 2 marks (20 marks total for 10 errors).    

Formula: Free cash flow = Net cash provided by operating activities − Capital expenditures − Cash dividends. A company reports positive net income but negative free cash flow. Which interpretation is most appropriate?

A company owes employees wages for work already performed but not yet paid. Which financial statement element is being identified?

A bank is reviewing Prairie Design Ltd.’s financial statements before approving a short-term loan. The bank is most interested in whether the company can repay the loan on time. Which type of user is the bank?

Oct. 5: Summit Trail purchased store equipment for $12,000 cash. Which journal entry should be recorded?