Question

Betadon Sdn Bhd is a wholesale company which buys and sells low quality, high priced clothing. The clothes are purchased from a factory in Melaka. Betadon sells the clothes to retailers located all over the Klang Valley. Some of the company's account balances as at 31 December 2019 are shown below: RM Ordinary shares (RM2 per share) 4,000,000 5% redeemable preference shares 500,000 Retained earnings at 31 December 2018 500,000 10% debenture (due 2030) 120,000 Freehold land (cost) 3,000,000 Buildings (cost) 2,000,000 Equipment (cost) 600,000 Furniture and fittings (cost) 450,000 Accumulated depreciation at 31 December 2018 - buildings 800,000 - equipment 410,000 - furniture and fittings 240,000 Provision for doubtful debts at 31 December 2018 30,000 Preference dividend paid - interim 12,500 Ordinary dividends paid - interim 92,000 Debenture interest 6,000 Bank 376,000 Cash 146,500 Trade receivables 240,000 Trade payables 132,000 During the year ended 31 December 2019, Betadon had sales of RM3,800,000 and purchases of RM1,600,000 Inventory levels are not consistent over the years, the starting inventory being RM100,000 and the closing inventory RM300,000. Betadon does not treat their employees well. Although wages and salaries of RM300,000 for 2019 had been paid out, as at 31 December 2019 RM60,000 remain outstanding for wages and salaries. During 2019, Betadon incurred and paid for the following expenses: Advertising expenses RM240,000 • Distribution expenses RM350,000 Administrative expenses RM917,250 General expenses RM31,750

Answer 1

1. Profit and Loss Statement -

Betadon Sdm Bhd Profit and Loss Account For the Year Ended December 31, 2019 Sales 3,800,000 Cost of Goods Sold: Op. Stock 100,000 Purchases 1,600,000 Cl. Stock (300,000) 1,400,000 Gross Profit 2,400,000 Expenses: Wages and Salaries Expenses 360,000 Advertising Expense 240,000 Distribution Expense 350,000 Administrative Expense 917,250 General Expense 31,750 Depreciation Expenses: Building 200,000 Equipment 19,000 Furniture and Fittings 22,500 Bad debts 3,000 Debenture Interest 12,000 Audit Fees 14,000 Total Expenses 2,169,500 Profit Before Tax (-) Income Tax Expenses 230,500 60,000 Profit after Tax (-) Tragnsfer to General Reserves 170,500 (24,000) Retained Earnings 146,500

2. Financial Position -

Betadon Sdm Bhd Balance Sheet At December 31, 2019 Asset Current Assets: Bank Cash Inventories Trade Receivables (-) Provision for doubtful debt Tax Receivable Total Current Assets 376,000 146,500 300,000 240,000 (33,000) 10,000 1,039,500 Non Current Assets: Freehold Land Building Accumulated Depreciation - Building Equipment Accumulated Depreciation - Equipment Furniture and Fittings Accumulated Depreciation - Furniture and Fittings 3,000,000 2,000,000 (1,000,000)| 1,000,000 600,000 (429,000) 171,000 450,000 (262,500) 187,500 Total Assets 5,398,000 Liabilities and Stockholder's Equity Current Liabilities: Trade Payable Wages and Salaries Payable Audit Fees Payable Preference Dividend Payable Total Current Liabilities 132,000 60,000 14,000 206,000 Non Current Liabilities: 10% Debenture Debenture Interest 120,000 6,000 126,000 Total Liabilities 332,000 Stockholder's Equity: Ordinery Shares 5% Redeemable Preference shares General Reserve Retained Earnings (+) Net Income (-) Ordinery Dividend Paid (-) Preference Dividend Paid Total Stockholder's Equity 4,000,000 500,000 24,000 500,000 146,500 (92,000) (12,500) 5,066,000 Total Liabilities and Stockholder's Equity 5,398,000