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Exercise on Income Statement and Statement of Financial Position (questio…
Tutorial 6
Financial statement with adjustments
QUESTION 1
The following Trial balance was extracted from the Books of Mega Enterprise as at 31 December
2017.
RM
RM
Capital
200,000
Duty on purchases
2,300
Insurance
6,000
Inventory as at 1 January 2017
70,000
Interest on loan
2,500
Account receivable and account payable
20,450
24,500
Purchase and sales
200,000
280,000
Land and building
265,550
Return inwards and return outwards
2,300
1,850
Accumulated depreciation – Office equipment
9,850
Accumulated depreciation – Motor vehicles
50,000
10% Loan from Hong Leong Bank
265,000
Cash
7,400
10% Fixed deposit
10,000
Discount allowed and discount received
2,500
5,000
Carriage outwards
8,200
Utilities
1,500
Bank
40,000
Office equipment
28,000
Salary and wages
25,000
Motor vehicles
140,000
Drawings
3,000
General expenses
3,500
Commissions
2,800
4,800
841,000
841,000
Additional information:
1. Inventory as at 31 December 2017 was valued at RM40,000
2. Included in the carriage outwards is carriage inwards amounting to RM1,320.
3. Depreciation for the year are to be provided as follows:
Office equipment
Straight line method, 10% per annum
Motor vehicles
Reducing balance method, 15% per annum
4. Fixed deposit was invested on 1 July 2017. The half year interest was not yet received.
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Exercise on Income Statement and Statement of Financial Position (questio…
5. One of the employees was given an advance salary of RM700.
6. The owner took goods worth RM2,000 and cash RM1,500 for personal use.
7. The following expenses are still outstanding as at 31 December 2017.
General expenses
RM600
Utilities
RM250
Required:
a) Prepare the Statement of profit or loss for the year ended 31 December 2017
b) Prepare the Statement of financial position as at 31 December 2017
QUESTION 2
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The following Trial Balance was extracted from the books of Smart Enterprise as at 31
December 2014.
Debit (RM) Credit (RM)
150,00
Purchases and Sales
97,500
0
75
Discount allowed and discount received
400
0
Carriage inwards
550
Carriage outwards
300
Return inwards and return outwards
4,000
3,500
Inventory as at 1 January 2014
16,000
Advertising
1,250
Dividend received
300
Rental
3,000
3,900
Bad debt
1,800
Salary
9,000
Utilities
1,500
Insurance
2,000
Cash
2,600
Bank
7,600
Account receivables and account payables
50,000
68,500
Capital
154,950
Loan from Maybank
90,000
Freehold premises
200,000
Furniture
8,000
Motor vehicles
52,000
Investment
32,000
Accumulated depreciation – Furniture
3,200
Accumulated depreciation – Motor vehicles
15,600
Drawing
1,200
490,700
490,700
Additional information:
1. Inventory as at 31 December 2014 was valued at RM52,000.
2. Rental received is for the period from 1 January 2014 to 31 March 2015.
3. RM200 of utilities was paid in advance.
4. The owner had withdrawn RM1,300 goods for his family use and no record was made.
5. Additional bad debts of RM1,100 was to be written off.
6. Insurance amounting RM1,000 was still outstanding at the end of the accounting period.
7. Depreciation is to be charged as follows:
i)
Furniture - 20% per annum on cost, straight line method.
ii)
Motor vehicles - RM5,200 per year.
8. Interest on loan at 5% per annum has not been paid.
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Required:
a) Prepare the statement of profit or loss for the year ended 31 December 2014.
b) Prepare the statement of financial position as at 31 December 2014.
QUESTION 3
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The following balances have been extracted from the books of Alpha Berhad as at 31 December
2016.
Debit
Credit
(RM)
(RM)
1,000,00
Land and Building
0
Furniture and Fixtures
600,000
Motor Vehicles
800,000
Accumulated Depreciation:
Motor Vehicles
216,800
5% Loan from CIMB
750,000
10% Fixed deposit at MAYBANK
100,000
Bank
Cash
Account payable
Inventories, 1 Jan
120,000
50,000
Account receivable
Dividend
Common stock/Share capital
Duty on purchase
Carriage inwards
Returns
Purchases and sales
Discounts
Salaries expenses
Repair and maintenance expenses
Commissions
Insurance expenses
Utilities
Rental received
General expenses
Retained earnings, 1 Jan
95,000
180,000
78,000
80,000
1,500,000
40,000
12,000
4,500
460,000
15,000
250,000
80,500
16,000
24,000
36,000
7,000
870,000
17,000
26,000
40,000
21,800
480,000
3,984,80
0
3,984,800
Additional information:
1.
Closing inventories as at 31 December 2016 was valued at RM120,000.
2.
Interest on loan has been accrued for the year ended. The loan was taken on 1 March
2016.
3.
Depreciation was to be provided:
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Furniture and Fixtures
RM2,500 per month.
Motor Vehicles
10% on reducing balance method.
Fixed deposit was invested on 1 July 2016. Interest on fixed deposit was still accrued for
4.
2016.
5.
Utilities outstanding amounted to RM1,300 and insurance prepaid was RM500.
6.
The company collected a receivable from customer, RM15,200, however the bookkeeper
recorded it at RM12,500. This transaction has not been adjusted in the books of Alpha Berhad.
Required:
c)
Prepare the statement of profit or loss for the year ended 31 December 2016.
d)
Prepare the retained earnings statement for the year ended 31 December 2016.
e)
Prepare the statement of financial position as at 31 December 2016.
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Exercise on Income Statement and Statement of Financial Position (questio…
QUESTION 4
Clearwater Sdn. Bhd. is a merchandising company which has business operations in Putrajaya.
The following balances have been extracted from the books as at 31 December 2015.
Debit
Credit
(RM)
(RM)
Land
900,000
Building
240,000
Machinery
60,000
Accumulated Depreciation:
Building
72,000
Machinery
11,400
7.5% Loan from Maybank, 10 Years
350,000
Bank overdraft
45,000
Cash
36,000
Account receivable
122,800
Inventories, 1 Jan
117,200
Account payable
65,000
Dividend
60,000
Common stock/Share capital
800,000
Supplies
110,000
Carriage outwards
40,000
Carriage inwards
9,600
Return inwards
2,000
Purchases and sales
440,000
980,000
Discount allowed
45,000
Salaries expenses
150,000
Bad debts
10,000
Prepaid insurance
36,000
Interest expenses
13,125
Telephone and internet charges
5,000
Rental and maintenance
36,000
General expenses
55,800
Retained earnings, 1 Jan
165,125
2,488,5
25 2,488,525
Additional information:
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Exercise on Income Statement and Statement of Financial Position (questio…
1. Closing inventories as at 31 December 2015 was valued at RM50,000.
2. A count on supplies on 31 December 2015 revealed RM60,000 worth still on hand.
3. Half of the interest on loan has not been paid for the year.
4. Commission received RM15,000 has not been included and no entries had been recorded in
the books.
5. Depreciation was to be provided:
Building
2% on cost
Machinery
10% on reducing balance
6. Telephone and internet charges outstanding amounted to RM1,300.
7. The prepaid insurance is for a 12-month policy purchased by cash on 1 March 2015. The
policy is effective from 1 March 2015.
Required:
a) Prepare the statement of profit or loss for the year ended 31 December 2015
b) Prepare the retained earnings statement for the year ended 31 December 2015.
c) Prepare the statement of financial position as at 31 December 2015.
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Exercise on Income Statement and Statement of Financial Position (questio…
Solution Tutorial 6
Q1 (a)
Mega Enterprise
Statement of profit or loss
For the year ended 31 December 2017
RM
Revenues
Sales
Less : Return inwards
Net Sales
Less : Cost of Goods Sold
Opening inventory
Purchases (-2,000)
Less: Return Outwards
Net purchases
Add: Carriage inwards
Add: Duty of purchase
Cost of goods purchased
Cost of Goods available for sale
Less : Closing Inventory
RM
280,000
(2,300)
Less: Operating expenses
Insurance
Interest on loan ( 10% x26,500)
Discount allowed
Carriage outwards (-1320)
Utilities (+250)
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277,700
70,000
198,000
(1850)
196,150
1,320
2,300
199,770
269,770
(40,000)
Gross Profit
Add : Other Revenues
Discount received
Commission received
Interest on fixed deposit (10% x10,000 x 6/12)
RM
229,770
47,930
5,000
4,800
500
10,300
6,000
26,500
2,500
6,880
1,750
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Exercise on Income Statement and Statement of Financial Position (questio…
Salary and wages (-700)
General expenses (+600)
Commissions
Depreciation expense- OE ( 10%X 28000)
Depreciation expense – MV ( 140K-50K)X15%
24,300
4,100
2,800
2,800
13,500
Net Loss
(91,130)
(32,900)
(b)
Mega Enterprise
Statement of financial position
As at 31 December 2017
RM
Current Assets
Cash in hand (-1,500)
Bank
Account receivable
Inventory
Interest receivable on Fixed deposit
Prepaid salary
Total current assets
RM
5,900
40,000
20,450
40,000
500
700
107,550
Non-current Assets
Long-term Investments
10% Fixed Deposit
Property, plant and equipment
Land and building
Office equipment
Less: Accumulated depreciation ( 9850+2,800)
Motor vehicles
Less: Accumulated depreciation (50,000+13,500)
Total Assets
Current Liabilities
Account Payable
Interest payable ( 26500 -2500)
General payable
Utilities payable
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RM
10,000
265,550
28,000
(12,650)
140,000
(63,500)
15,350
76,500
24500
24000
600
250
357,400
474,950
49,350
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Long-term liabilities
Long-term loan
Owner’s Equity
Capital
Less: Net Loss
Less : Drawing (3000 + (2,000 + 1,500)
Total owner’s equity
Total liabilities and owner’s equity
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265,000
200,000
(32,900)
(6,500)
160,600
474,950
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QUESTION 2(a)
Smart Enterprise
Statement of profit or loss
For the year ended 31 December 2014 /
RM
RM
RM
Revenues
Sales
150,000/
Less : Return inwards
(4,000)/
Net Sales
146,000/
Less : Cost of Goods Sold
Opening inventory
16,000/
Purchases (-1,300)
96,200/
Less: Return Outwards
(3,500)/
Net purchases
Add : Carriage inwards
Cost of goods purchased
Cost of Goods available for sale
Less : Closing Inventory
92,700
550/
93,250
109,250
(52,000)/
Gross Profit/
57,250/
88,750/
Add : Other Revenues
Discount received
Dividend received
Rental received
750/
300/
3,120/
4170/
Less: Operating expenses
Discount allowed
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400/
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Carriage outwards
Advertising
Rental expense
3,000/
Bad debt (+ 1,100)
2,900/
Salary
9,000/
Utilities (-200)
1,300/
Insurance ( +1,000)
3,000/
Depreciation expense –Furniture
1,600/
Depreciation expense – MV
5,200/
Interest on loan (5% x 90,000)
4,500/
Net Income
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300/
1,250/
(32,450)/
60,470/
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QUESTION 2(b)
Smart Enterprise
Statement of financial position
As at 31 December 2014 /
RM
RM
RM
Current Assets
Cash
2,600/
Bank
7,600/
Account receivable (- 1,100)
48,900/
Inventory
52,000/
Prepaid utilities
200/
Total current assets
111,300
Non-current Assets
Long term investment
Investment
32,000/
Property, plant and equipment
Freehold premises
Furniture
Less: Accumulated depreciation
Motor vehicles
Less: Accumulated depreciation
200,000/
8,000
(4,800)
3,200/
52,000
(20,800)
31,200/
Total Assets
234,400
377,700/
Current Liabilities
Account Payable
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68,500/
Unearned rental
780/
Interest payable
4,500/
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Insurance payable
1,000/
Total current liabilities
74,780
Long-term liabilities
Long-term loan
90,000/
Owner’s Equity
Capital
60,470/
Less : Drawing (+1,300)
(2,500)/
Total owner’s equity
Total liabilities and owner’s equity
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154,950/
Add :Net income
212,920
377,700/
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QUESTION 3 (a)
Alpha Berhad
SPL
For the year ended 31 December 2016
RM
RM
RM
Revenues
Sales
870,000/
Less : Return inwards
(4,500)/
Net Sales
865,500
Less : Cost of Goods Sold
Opening inventory
Purchases
80,000/
460,000
/
Less: Return outwards
(7,000)/
Net purchase
453,000
Add: Carriage inwards
12,000/
Duty on purchase
40,000/
Cost of goods purchased
Cost of Goods available for sale
Less : Closing Inventory
505,000
585,000
(120,000)
/
Gross Profit /
465,000
400,500
Add : Other Revenues
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Discount received
17,000/
Commission received
26,000/
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Rental received
Interest on FD (10% x 100,000 x 6/12)
40,000/
5,000/
88,000
Less: Operating expenses
Discount allowed
Salary
Repair and maintenance
80,500/
Commission
16,000/
Insurance ( - 500)
23,500/
Utility ( + 1,300)
37,300/
General expenses
21,800/
Interest expense ( 5% x 750,000 x 10/12)
31,250/
Depreciation exp – F& F ( 2,500 x 12)
30,000/
Depreciation exp – MV ( 800k -216,800) x 10%
58,320/
Net Loss /
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15,000/
250,000/
(563,670)
(75,170)
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QUESTION 3(b)
Alpha Berhad
Retained earnings statement
For the year ended 31 December 2016 /
RM
RM
RM
Retained earnings, January 1
480,000/
Less :Net Loss /
(75,170)
Less : Dividends
(180,000)/
404,830
Retained earnings, December 31 /
224,830
QUESTION 3(c)
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Alpha Berhad
SOFP
As at 31 December 2016
RM
RM
RM
Current Assets
Cash (+ 2,700)
52,700/
Bank
120,000/
Account receivable ( - 2,700 )
92,300/
Inventory
120,000/
Prepaid insurance
500/
Interest on FD
5,000/
390,500
Non-current Assets
Long term Investment
Fixed Deposit
100,000/
Property, plant and equipment
Land & Building
Furniture and Fixtures
Less: Accumulated depreciation
Motor vehicles
Less: Accumulated depreciation
1,000,000/
600,000
(30,000)
570,000/
800,000
(275,120)
524,880/
Total Assets
2,094,880
2,585,380
Current Liabilities
Account Payable
78,000/
Interest payable
31,250/
Utility payable
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1,300/
110,550
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Long-term liabilities
Long-term loan
750,000/
Stockholder’s Equity
Common stock/share capital
1,500,000/
Add :Retained earnings /
224,830
Total liabilities and equity
1,724,830
2,585,380
QUESTION 4 (a)
Clearwater Sdn.Bhd
Statement of profit or loss
For the year ended 31 December 2015 /
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Exercise on Income Statement and Statement of Financial Position (questio…
RM
RM
RM
Revenues
Sales
980,000/
Less : Return inwards
(2,000)/
Net Sales
978,000
Less : Cost of Goods Sold
Opening inventory
Purchases
Add: Carriage inwards
Net purchases/cost of goods purchased
Cost of Goods available for sale
Less : Closing Inventory
117,200/
440,000/
9,600/
449,600
566,800
(50,000)/
Gross Profit /
516,800
461,200
Add : Other Revenues
Commission received
15,000/
Less: Operating expenses
Carriage outwards
Discount allowed
45,000/
Salaries expenses
150,000/
Bad debts
10,000/
Insurance expenses (3,000 x 10)
30,000/
Interest expense ( + 13,125)
26,250/
Telephone and internet expense (+1,300)
Rental and maintenance
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40,000/
6,300/
36,000/
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