Question

QUESTION 1 Red Velvet Berhad, a public company, closes its accounts on 30 June every yw The company reported the following unadjusted trial balance on 30 June 2017 Credit RM Debit RM 1.100.000 1,300,000 364,000 700,000 400,000 300,000 125,000 300,000 167,400 120,500 4,800 30,000 438,600 Freehold land Building at cost Accumulated depreciation-building Plant and machinery at cost Accumulated depreciation Plant and machinery Patent Accumulated amortisation-patent Long-term investment Inventory Trade receivables Allowance for doubtful account Prepaid insurance Cash and cash equivalents Loan from bank Account payables 8% Note payable Sales revenue Income from investment Cost of sales Administrative expenses Distribution expenses Other operating expenses Income tax expense Ordinary share capital, 500,000 shares issued Retained camnings (as at 1 July 2016) Dividend Finance cost 500,000 248.800 325,000 2,717,700 100,600 1,112,800 232,600 117,200 118,500 311,600 1,000,000 792,800 100,700 128.800 6,578,700 6,578,700

Answer 1

Red Velvet Berhad Adjusting Enteries Debit in RM Credit in RM Trans. Particulars Insurance Expense a/c 20000 Dr. a. To Prepaid Insurance 20000 (Insurance expensed) 30000 x 4/6 Interest Expense a/c b. Dr. 6500 To Interest Payable 6500 (Interest accrued) 325000 x 8% x 3/12 Interest Receivable a/c Dr. 7300 C. To Interest Income 7300 (Interest revenue accrued) d. Allowance for doubtful account Dr. 1600 To Accounts Receivable 1600 (Uncollectibles written off) Trade Receivable a/c Dr. 1150 To Allowance for doubtful account 1150 (Uncollectibles written off collected) Cash a/c Dr. 1150 To Accounts Receivable 1150 (Accounts Receivable collected) Bad Debts a/c Dr. 1595 To Allowance for doubtful account 1595 (Bad debts estimated) 120500 - 1600 +1150 - 1150 =118900 x 5% = 5945 - 4350 = 1595 Allowance for doubtful account = 4800 -1600 + 1150 = 4350 Administrative Expense - Build a/c Dr. 52000 e. To Accum. Depre - Build 52000 (To record depreciation) 1300000 x 4% = 52000 Cost of sales - Plant & Mach. a/c Dr. 60000 To Accum. Depre - Plant & Mach. 60000 (To record depreciation) (700000 - 400000 ) x 20% = 60000 Freehold Land a/c To Revaluation reserve f. 200000 Dr. 200000 (Freehold land revalued) Amortisation Expense a/c Dr. 25000 25000 To Accum. Amortisation - Patent (Patent amortised) 300000 / 12 = 25000 g. Dividend a/c Dr. 25000 To Dividend Payable 25000 (Dividend declared) 500000 x 0.05

Worksheet For the Period ending 30.6.2017 Unadjusted Adjustments Adjusted Particulars Debit in RM Credit in RM Debit in RM Credit in RM Debit in RM Credit in RM Cash and Cash Equivalent 438600 1150 439750 Interest Receivable 6150 6150 Trade Receivables 120500 1150 1600 120050 Allowance for doubtful account 1600 4800 2745 5945 Inventory 167400 167400 Prepaid Insurance 20000 30000 10000 Long Term Investment 300000 300000 Freehold Land 11 :00000 Building at Cost 1300000 1300000 Accumulated Depreciation - Build. Plant and Machinery 364000 52000 416000 700000 700000 Accumulated Depreciation - Plt & Mach. 60000 400000 460000 Patent 300000 300000 Accum. Amortisation - Patent 125000 25000 150000 Accounts Payable 248800 248800 Interest Payable 6500 6500 Dividend Payable 25000 25000 8% Note Payable 325000 325000 Loan from Bank 500000 500000 Ordinary Share Capital Retained Earnings 1000000 1000000 792800 792800 Revaluation reserve 200000 200000 Dividend 100700 25000 125700 Income from Investment 107900 100600 7300 Sales Revenue 2717700 2717700 60000 Cost of sales 1112800 1172800 Administrative Expense 52000 232600 284600 Distribution Expense 117200 117200 Other Operating expense 118500 118500 128800 Finance cost 128800 Insurance Expense 20000 20000 Interest Expense 6500 6500 Bad Debts 1595 1595 Amortisation Expense 25000 25000 Income Tax Expense 311600 311600 Totals 6578700 6578700 400145 400145 6955645 6955645

Statement of Income For the Period ending 30.6.2017 Sales Revenue 2717700 Cost of sales -1172800 Gross Profit 1544900 Distribution Expense 117200 Administrative Expense 284600 Other Operating expense 118500 128800 Finance cost Insurance Expense 20000 Bad Debts 1595 Amortisation Expense 25000 695695 Operating Income 849205 Non Operating Items: Income from Investment 107900 Interest Expense -6500 101400 950605 Income Tax Expense -311600 639005 Net Income Statement of changes in Equity For the Period ending 30.6.2017 Ordinary Retained Revaluation Shares Earnings Total Reserve Beginning Balance 1000000 1792800 792800 Add:Freehold Land 200000 200000 1000000 1992800 792800 200000 Add:Net Income 639005 639005 Less:Dividends -125700 -125700 Ending Balance 1000000 1306105 200000 2506105

Balance sheet As at 30.6.2017 Assets Amounts in RM Amounts in RM Liabilities Amounts in RM Amounts in RM Current Liabilities Current Assets Accounts Payable Cash and Cash Equivalent 248800 439750 Interest Payable 6500 Interest Receivable 6150 Dividend Payable Trade Receivables 120050 280300 25000 Allowance for doubtful account -5945 Non Current Liabilities Inventory 167400 737405 8% Note Payable Prepaid Insurance 10000 325000 Loan from Bank 825000 500000 Non Assets 300000 Long Term Investment Freehold Land 1300000 Building at Cost Accumulated Depreciation - Build. Plant and Machinery 1300000 -416000 884000 Shareholders Equity 700000 Accumulated Depreciation - Plt & Mach. -460000 240000 Ordinary Share Capital 1000000 Retained Earnings Patent 300000 1306105 -150000 150000 Revaluation reserve 200000 Accum. Amortisation - Patent 2506105 3611405 Total Liabilities & Equity Total Assets 3611405