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. iii. Purchase of material on credit from trade supplier amounted to RM143,240. On 1 December 2019, the company receives advances RM25,000 by cheque from customer, l-pple. Techno Active requires to manufacture one special computer accessories for l-pple. During the year, the company pays RM2,300 for utilities payable. And by the end of the year RM2,570 utilities bill still not being recorded and paid. Techno Active paid all salary payable On 1 September 2019, the company receive RM75,000, 6%, 6 month notes payat from IndahBank. Sales for the year is RM739,700. This amount includes 5% sales tax payable to Custom Malaysia The sales for the year are subject to product warranties for 6 months and estimates that warranty costs will be 5% of sales. viii. ix.

requirement

Answer 1

Answer: Page 1 * According the data- a) Journal Entry in the books of Techno Active Sdn Bhd for the year ended on 31st Dec, 2019 Date I particulars Amount in RM Ref Debit credit I :) 01-feb Notes Payable Alc Dol 125000 Interest Payable AK interest Expense Alcool To Bank Ak 128249 (Being notes payable paid with interest 2970 279 175390 175390 Trade Payables Ak To Bank Ak (Being Trade Payables paid by cheque) Raw Materials Inventoryal D To Toade payables Alc (Being material purchased I on credit) 143240 [143240

page-2 Amount in RM Ref Debit credit 25000 25000 2300 2300 Date particulars in ol Dec Bank Al lor To Unearned Income Alc (Being Advance received from customer for mamme on staging computer | utility payables Alcos To Bank Al (Being utility payable paid) |31-Dec! Utilities Expense Al Dr. To Utilities Payable AK (utilities expenses booked) salary payable Al To Bank Al (Being salary payable paid) rii Ol-sep Bank Al b r. To Notes payable Alc (Being Notes Payable received from Indian Bank) 2570 2570 15000 15000 75000 75000

age-3 Date | Amount in RM Debit credit 739700 704476 35224 135224 35224 I particulars viii Trade Receivables Al Do To sales Alc To sales Tax payable Alc ix) [31-Dec warranty Expense Ak 08. TO Estimated warranty Liability Al (Being warranty Expenses @5% of 704476 (sales) are booked |31-Dec Interest Expense Ak do To interest payable Alc (Being Interest Exp booked on notes Payable @ 6% on RM 75000 for 4 months) 1500 1500

© page-4 Cuodent Liability section of Techno Active Sdn Bhd as on 31 Dec, 2019 Particulars Amount in RMI | Notes payable | 75000 | Trade payables | 45850 Salary payables Utility payables 1 4770 Interest Payable 1500 Unearned Income 25000 Estimated wassanty ! 35224 L Liability Sales Tax payable . 35224 Total 187344 © In case the co. Techno Active Sdn Bhd has essed in under stating the interest Expense, then, it can rectify the same by passing adjustment entry. Notes: It is presumed that 6% is per annum sate accordingly interest is calculated for he months

page-s © Reasons for accounting the wastanty expenses in company's Books: - i obligation for the company, when a company gives warranty, then it's the company's obligation to replace or sepaio the product if it is defective. That obligation generates liability on the company at the time of sale, therefore it should be accounted in books on estimation basis: Fi, Matching principle :- As per matching principle, revenues should match with expenses. Therefore, to comply with this matching principle, the company shall book warranty expenses. - X -