Question

You are required to prepare the following for the company:

a) Journal for the adjusting entries on 31 March 2020.

(7)

b) Statement of Comprehensive Income for the year ended 31 March 2020.

(12)

c) Statement of Financial Position as at 31 March 2020.

The following trial balance was extracted from the books of Rauf Trading Company as at 31 March 2020. Accounts Debit (RM) Credit (RM) Sales 314.30 185.600 320 8.200 32.800 Purchases Discounts received and Discounts allowed Cash at bank Cash in hand Capital at 1 April 2019 Drawings Office equipment Rent expense Wages & salaries expense Advertising expense 5.800 17.500 6.800 42.400 12.900 Utilities expense 7,500 24.632 10.490 8.240 810 Accounts receivable Accounts payable Inventory at 1 April 2019 Provision for doubtful debts at 1 April 2019 Delivery van Van running costs Bad debts Total 348,750 348,750 Additional information: i. Inventory at 31 March 2020 was RM4,800. ii. Wages and salaries accrued at 31 March 2020 was RM680. iii. Rent prepaid at 31 March 2020 was RM460. iv. Van running costs payables at 31 March 2020 was RM144. . Increase in the provision for doubtful debts by RM182. vi. Annual depreciation calculation is based on the straight line method at the following rates:

Answer 1

Adjusting entries

Date	Accounts title and explanation	Debit(RM)	Credit(RM)
March 31,2020	Closing inventory	4,800
	Trading A/C		4,800
	[Adjustment entry made for closing inventory ]
March 31,2020	Wages and salaries expense	680
	Wages and salaries accrued		680
	[adjustment entry made for accrued wages and salaries]
March 31, 2020	Prepaid rent	460
	Rent expense		460
	[Adjustment entry made for prepaid rent ]
March 31,2020	Van running costs	144
	Accrued van running costs		144
	[Van running costs are due, but not yet paid , adjusted]
March 31,2020	Statement of profit and loss	182
	Provision for doubtful debts		182
	[Provision for doubtful debts has been increased ]
March 31,2020	Depreciation expense - Office Equipment [ 17,500 X 5%]	875
	Accumulated depreciation - Office equipment		875
	[Adjustment entry made for depreciation on office equipment ]
March 31,2020	Depreciation expense - Delivery Van [ 34,200 X 10%]	3,420
	Accumulated Depreciation - Delivery Van		3,420
	[Adjustment entry made for depreciation on delivery van ]

Statement of Comprehensive income

For the year ended March 31,2020

	RM	RM	RM
Sales			314,330
Cost of goods sold :
Opening inventory		8,240
Purchase		185,600
Wages and salaries expense	42,400
Add: Accrued wages and salaries expense	680
		43,080
Cost of goods available for sale		236,920
Less: Closing inventory		4,800
Less: Cost of goods sold			232,120
Gross profit			82,210
Indirect expenses :
Discount allowed		1,640
Rent expense	6,800
Less: Prepaid rent	460
		6,340
Advertising expense		12,900
Utilities expenses		7,500
Provision for doubtful debts		182
Van running costs	1,230
Add: Accrued van running costs	144
		1,374
Baddebts		1,460
Depreciation expenses - office equipment		875
Depreciation expenses - Delivery van		3,420
Less: Total indirect expenses			35,691
Add: Indirect income
Discount received			320
Net income			46,839

Statement of Financial position

For the year ended March 31,2020

Assets :	RM	RM
Current assets :
Cash in hand		648
Cash at bank		8,200
Accounts receivable		24,632
Inventory (Closing)		4,800
Prepaid rent		460
Total current assets		38,740
Non current assets :
Office equipment	17,500
Accumulated depreciation - Office equipment	(875)
		16,625
Delivery Van	34,200
Accumulated depreciation - Delivery Van	(3,420)
		30,780
Total non current assets		47,405
Total assets		86,145
Liabilities and shareholder's equity :
Liabilities :
Current liabilities :
Accounts payable		10,490
Provision for doubtful debts	810
Add: Further provision made	182
		992
Accrued wages and salaries		680
Accrued van running costs		144
Total current liabilities		12,306
Non current liabilities :		Nil
Total liabilities		12,306
Shareholder's equity :
Capital ( April 01,2019)		32,800
Less: Drawings		5,800
		27,000
Add: Net profit		46,839
Total shareholder's equity		73,839
Total liabilities and shareholder's equity		86,145