Question

Garnet Berhad, a public company, closes its accounts on 30 June every year. 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 earnings (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

	Adjusting Journal Entries	Debit	Credit
1	Interest expense	6500
	Interest payable		6500
	(325000*8%*3/12)
2	Interest receivable	7300
	Income from investment		7300
3	Administrative expense	52000
	Acc. Depn.-building		52000
	(1300000*4%)
	Cost of sales	60000
	Acc. Depn.-plant & machinery		60000
	(700000-400000)*20%
4	Freehold land	200000
	Revaluation reserve		200000
	(1300000-1100000)
	Amortisation expense-patents	25000
	Acc. Amortsn.-patent		25000
	300000/12

Garnet Berhad
Trial Balance
	Unadjusted T/B		Adjusing entries		Adjusted T/B
	Debit	Credit	Debit	Credit	Debit	Credit
Freehold Land	1100000		200000		1300000
Building at cost	1300000				1300000
Acc. Depn.-Building		364000		52000		416000
Plant & machinery at cost	700000				700000
Acc. Depn.-P&M		400000		60000		460000
Patent	300000				300000
Acc. Amortsn.-patent		125000		25000		150000
Long-term investment	300000				300000
Inventory	167400				167400
Trade receivables	120500				120500
Allowance for doubtful account		4800				4800
Prepaid insurance	30000				30000
Interest receivable			7300		7300
Cash &cash equivalents	438600				438600
Loan from Bank		500000				500000
Accounts payable		248800				248800
Interest payable				6500		6500
8% Note payable		325000				325000
Sales revenue		2717700				2717700
Income from investment		100600		7300		107900
Cost of sales	1112800		60000		1172800
Administrative expenses	232600		52000		284600
Distribution expenses	117200				117200
Other operating expense	118500				118500
Amortisation expense-patents			25000		25000
Income tax expense	311600				311600
Ordinary share capital		1000000				1000000
Retained Earnings		792800				792800
Revaluation reserve				200000		200000
Dividend	100700				100700
Finance cost	128800				128800
Interest expense			6500		6500
Totals	6578700	6578700	350800	350800	6929500	6929500

Profit & loss account for the Yr. ended June 30.2017
Sales revenue		2717700
Cost of sales		1172800
Gross profit		1544900
Less: Operating expenses:
Administrative expenses	284600
Distribution expenses	117200
Other operating expense	118500
Amortisation expense-patents	25000	545300
Operating Income		999600
Non-opg.( expenses)/income
Finance cost	-128800
Interest expense	-6500
Income from investment	107900	-27400
Income before tax		972200
Income tax expense		311600
Net Income		660600
Statement of retained earnings
Beginning balance		792800
Net income		660600
Dividends		-100700
Ending balance		1352700
Other Comprehensive income
Revaluation reserve		200000

Statement of Financial position
as at June 30. 2017
Assets
Freehold Land		1300000
Building at cost	1300000
Acc. Depn.-Building	-416000
Buildings,net		884000
Plant & machinery at cost	700000
Acc. Depn.-P&M	-460000
Plant & machinery,net		240000
Patent	300000
Acc. Amortsn.-patent	-150000
Patent,net		150000
Long-term investment		300000
Total Fixed assets			2874000
Inventory		167400
Trade receivables	120500
Allowance for doubtful account	-4800
Trade receivables,net		115700
Prepaid insurance		30000
Interest receivable		7300
Cash &cash equivalents		438600
Total current assets			759000
Total assets			3633000
Liabilities & Equity
Liabilities
Accounts payable		248800
Interest payable		6500
Total current liabilities			255300
8% Note payable		325000
Loan from Bank		500000
Total long-term liabilities			825000
SH. Equity
Ordinary share capital		1000000
Retained Earnings		1352700
Revaluation reserve		200000
Total SH. equity			2552700
Total Liabilities & Equity			3633000