Question

QUESTION (30 MARKS) Techno Active Sdn Bhd is the manufacturing and selling computer and laptop accessories company. The current liability section for Techno Active Sdn Bhd as at 31 December 2018 is shown below. Statement of Financial Position As at 31 December 2018 Current Liabilities Notes Payable (1) Trade payables Salary Payables Utilities payable Interest Payable RM 125,000 78,000 15,000 4,500 2,970 During 2019, the following transactions related to liabilities occurred. On 1 February 2019, pay notes payable (1) RM125,000 together with the interest payable for the notes. The interest for the notes for the month on January 2019 is RM279. For the year 2019, TechnoActive pay trade payables amounted to RM175,390 by cheque.

Answer 1

a) Record for Journals for the liability Transactions :

1/2/19

Notes Payable (1). Dr.... 125,000

Interest Payable ... Dr. 2970

Interest on Notes .... Dr. 279

To Cash / Bank 128,249

(Being Notes paid along with Accrued interest till Jan,19)

During the Year :

Utilities Payable ... Dr. 2300

To Cash... 2300

(Being Utilities Bill Paid)

End of Year

Utilities Payable ... Dr. 2570

To Cash... 2570

(Being Utilities Bill Paid)

Utilities Dr... 2570

To Utilities Payable ... 2570

(Being Utilities Bill Recorded)

During the Year :

Salary Payable ... Dr. 15000

To Cash... 15000

(Being Salary Paid)

1/9/2019

Bank .... Dr. 75000

Notes payable to IndahBank ... 75000

(Being notes received from Indahbank @ 6% for 6 months)

b) 31/12/19

Interest Expenses .... Dr. 1500

Interest payable ... 1500

(Being interest payable on Notes from Indahbank on 75000 @ 6% for 4 months)

C)Statement of financial Position

Current Liabilities :

Notes from IndahBank - 75000

Trade Payable - 45850

Utilities - 2200

Interest Payable - 1500

Advance from customer - 25000

Warranty Cost : 36985 (Assume not paid in 2019)

Total : 186535.

d) Company to pass journal entry for interest payable on notes.

e) Accounting for warranty cost is required as the sale are booked in 2019 and estimated warranty expenses are 5% of sales (assume including custom duty) as sales realised in 2019 so warranty expenses has to be booked in same year although part of the same may be incurred in next year to recognise revenue with cost.