Question

The following accounts are taken from the book of GGGG books as at 31 December 2019. Use the following information to prepare the trial balance as at 31 December 2019.

	RM
Purchases	26,000
Sales	33,690
Capital	150,000
Cash in hand	52,000
Opening inventory	5,600
Debtors	70,910
Furniture	10,000
Creditors	1,900
Office equipment	16,000
Wages	1,780
Interest	230
Interest received	4,900
Rental	18,000
Machineries	30,000
Commission	190
Cash at bank	53,200
Loan	100,000
Utilities bills	120
Drawings	5,600
Advertisement	360
Insurance	500
	580,980

GGGG Books
Trial Balance
As on 31st December 2019
	Debit	Credit
Purchase	26,000
Sales		33,690
Capital		150,000
Cash in hand	52,000
Opening inventory	5,600
Debtors	70,910
Furniture	10,000
Creditors		1,900
Office equipment	16,000
Wages	1,780
Interest	230
Interest received		4,900
Rental	18,000
Machineries	30,000
Commission	190
Cash at bank	53,200
Loan		100,000
Utilities bills	120
Drawings	5,600
Advertisement	360
Insurance	500
Total	290,490	290,490

1. 3 Depreciation

• The total life of furniture is 5 years with RM 1,000 salvage value.
• Depreciation on office equipment at 10% based on straight line method.
• Depreciation on machineries at the end of the year at 10% based on straight line method.

1. 3 Bad debts and allowance for doubtful debts

• Bad debts written off during the year is RM 500.
• Provision for doubtful debts at 5% of account receivable.
• Additional provision for doubtful debts at 2% at the end of the year based on account receivable balance

1. 4 Accruals and prepayments

• Interest payable at the end of the year RM 200.
• Utilities bill not paid for the month of December at RM 500.
• Insurance paid in advance for next 3 months.
• Advertisement service performed in December but bill yet to received RM 100.

1. Prepare the journal entries                                                                                  (10 marks)

Prepare journal entries for each transactions above.

2. Prepare the ledger                                                                                            (20 marks)

Using the information above and in (a). Balancing-off the account and get the balance of each accounts.

Answer 1

Solution: Journal Entries

Dr.		Cr.
Date	Particulars	Amount	Amount
	Depreciation on office Equipment A/c Dr.	1600
	To office Equipment A/c		1600
	(for depreciation charged on office equipment)
	Depreciation on Machineries A/c Dr.	3,000
	To Machineries A/c		3,000
	(For depreciation charged on machinery)
	Bad debts A/c Dr.	500
	To Debtors A/c		500
	(For bad debts written off )
	Bad debts A/c Dr.	3520.5
	To Provision for bad and doubtful debts A/c		3520.5
	(For Provision for bad and doubtful debts created)
	Bad Debts A/c Dr.	1337.8
	To Provision For Bad and Doubtful Debts A/c		1337.8
	(For Another provision created @2%)
	Interest A/c Dr.	200
	To outstanding Interest A/c		200
	(For interest Payable)
	Utility Expenses A/c Dr.	500
	To Outstanding Utility Expenses A/c		500
	(For utility bill not paid)
	Prepaid Insurance A/c Dr.	100
	To Insurance A/c		100
	(For prepaid insurance of 3 months)
	Accrued Advertisement A/c Dr.	100
	To advertisement A/c		100
	(for advertisement services performed but amount not received)

Depreciation on office Equipment A/c

Particulars	Amount	Particulars	Amount
To Balance b/d
To office Equipment A/c	1600	By Balance c/d	1600

office Equipment A/c

Particulars	Amount	Particulars	Amount
To Balance B/d	16000
		By Balance c/d	16,000

Depreciation on Machinery A/c

Particulars	Amount	Partoculars	Amount
To Balance b/d
To Machinery A/c	3,000	By Balance c/d	3,000

Machinery A/c

Particulars	Amount	Particulars	Amount
To Balance B/d	30,000
		By Balancec/d	30,000

Bad debts A/c

Particulars	Amount	Particulars	Amount
To Balance b/d
To Debtors A/c	500
To Provision for bad and doubtful debts A/c	3520.5
To Provision for bad and doubtful debts A/c	1337.8	By Balance c/d

Provision for Bad and Doubtful Debts A/c

Particulars	Amount	Particulars	Amount
		By Balance b/d
		By Bad debts A/c	3520.5
		By Bad debts A/c	1337.8

Interest A/c

Particulars	Amount	Particulars	Amount
To Balance b/d	230
To outstanding Interest A/c	200	By Balance c/d	430

Outstanding Interest A/c

Particulars	Amount	Particulars	Amount
		By Balance b/d
		By Interest A/c	200

Debtors A/c

Particulars	Amount	Particulars	Amount
To Balance b/d	70910	By Bad Debts A/c	500
		By Balance c/d	70410

Utilities Bills A/c

Particulars	Amount	Particulars	Amount
To Balance b/d	120
To Outstanding utility bills A/c	500	By Balance c/d	620

Outstanding Utility Bills A/c

Particulars	Amount	Particulars	Amount
		By Balance B/d
		By utility bills A/c	500

Prepaid Insurance A/c

Particulars	Amount	Particulars	Amount
To Balance b/d
To Insurance A/c	100	By Balancec/d	100

Insurance A/c

Particulars	Amount	Particulars	Amount
To Balance b/d	500	By Prepaid Insurance A/c	100
		By Balancec/d	400