Question

Question 6 On 1" September 2019, the ledger of CooWart Sdn. Bhd. contains the following liabilities accounts vo Ringgit Malaysia (RM) Accounts Payable Unearned Service Revenue Sales Tax Payable 47,352 15,400 10,350 During the month, the following transactions occurred. 1 2 10 13 25 30 31 Borrowed RM70,000 from OK Bank on 12 months, 7% notes payable Provided services for customers who had made advance payments of RM8,000. Paid RM10,350 sales tax payable to Custom Department by cash. Purchased printing machine on credit, RM14,500 from Perfect Printing Sdn Bhd Paid RM26,742 for accounts payable by cash. Sales for September 2019 amounted to RM167,480 included 5% of tax Accrued the interest on notes payable. Required: a) b) Journalize the above transactions Prepare the current liabilities section of Statement of Financial Position at 30 September 2019 CooWart Sdn Bhd paid its accrued interest on 5 October 2019. Journalize this transaction. c) Question 7 Sharp Focus Sdn Bhd has been sued for RM0.5 million for a workplace injury involved one of its employees while working at the entity's outlets in June 2017. The lawsuit was filed in September 2017. The legal advice is that is it possible that the company will lose the lawsuit. Further evidence in June 2018 indicates that it is possible that the company will be liable and estimated of the lawsuit is RM1.5 million. Based on Malaysian Financial Reporting Standards (MFRS) 137 Provisions, Contingent Liabilities and Contingent Assets, Determine how the entity should treat the lawsuit above as at 31 December 2018 and 2019.

Answer 1

Answer to Q#6 (First question in the list):

a) Credit Debit 70,000 70,000 8,000 8,000 10,350 10,350 14,500 Date General Journal Sep. 1 Cash Note Payable Sep. 2 Unearned Service Revenue Service Revenue Sep. 10 Sales Tax Payable Cash Sep. 13 Printing Machine Accounts Payable Sep. 25 Accounts Payable Cash Sep. 30 Cash Sales Revenue Sales Tax Payable Sep. 30 Interest Expense Interest Payable 14,500 26,742 26,742 167,480 159,505 [167480 x 100/105 --> as it total sales amount includes 5% sales tax] 7,975 [167480 x 5/105 --> as it total sales amount includes 5% sales tax] 408 408 [70000 x 7% x (1/12) --> 1 month's interest expense is accrued]

b) CooWart SDN BHD Balance Sheet (Partial) September 30, 2019 Current Liabilities: Accounts Payable 35,110 Unearned Service Revenue 7,400 Sales Tax Payable 7,975 Note Payable (Short-term) 70,000 Interest Payable 408 Total Current Liabilities [47,352 + 14,500 - 26,742] (15,400 - 8,000] [10,350 - 10,350 +7,975] [Ref: Entry dated Sept. 1] [Ref: Entry dated Sept. 30] 120,894 Date General Journal Oct. 5 Interest Payable Cash Debit 408 Credit [Ref: Entry dated Sept. 30] 408