TUTORIAL TOPIC 3 – COMPLETING THE ACCOUNTING

CYCLE

Question 1
Distinguish the items below into non-current assets (NCA), current assets (CA), non-
current liabilities (NCL), current liabilities (CL), expenses (E), revenue (R) and owner’s
equity(OE).

Items NCA CA NCL CL E R OE

Office equipment
5-month loan from Azri
Bought shares from
Bestari Bhd
Bank overdraft
Premises
Cash in hand
Rent received
Insurance
5-year loan from CIMB
Accounts receivable
Half yearly fixed deposit
Inventory
Travelling expenses
Worker’s wages
Discount received
Mortgage on loan
Machinery
Electricity and
telephone bill
Capital
Furniture
Dividend received
Interest income
Printing and stationery
Question 2

Classify the following items as (a) accrued expense, (b) prepaid expense, (c) accrued revenue
and (d) prepaid revenue.
a) Fees earned but not yet received. ______.
b) Taxes owed but payable in the following period. ______.
c) Salary owed but not yet paid. ______.
d) Fees received but not yet earned. ______.
e) Utilities bills received but not yet paid. _______.
f) A two-year premium paid on a fire insurance policy. ______.
g) Subscriptions received in advance by a magazine publisher. ______.

Question 3

B.Jones is in business as a builder’ merchant. The following credit transactions took place
during April 20X1
1 Apr Bought goods on credit from Brick Ltd for RM275
2 Apr Sold goods on credit to Oak Ltd for RM410
4 Apr Bought goods costing RM315 from Stone Ltd on credit
7 Apr Sold goods on credit to Pine Ltd for RM870
11 Apr Bought goods costing RM270 from Slate Ltd on credit
15 Apr Sold goods on credit to Lime Ltd for RM630
17 Apr Bought goods on credit from Brick Ltd for RM275
19 Apr Received a credit note for RM120 from Brick Ltd
22 Apr Sent Oak Ltd a credit note for RM220
24 Apr Stone sent us a credit note for RM75 in respect of goods returned
27 Apr Sent Pine Ltd a credit note for RM360.

You are required to make the necessary entries in the books of prime entry and post to the
related ledger.
 Question 4

Kedai Elektrik Kami started its business on 1 July 2019. The transactions that took place in the
month of July 2019 were as follows:
July
1 The owner brought in cash RM100,000 and deposited RM200,000 into the business bank
account.
3 The business purchased goods from Seng Heng Sdn Bhd on credit amounting to
RM25,500.
5 Sold goods worth RM8,500 on credit to Safi.
7 Bought a furniture worth RM12,000 on credit from ABC Holding.
11 The owner brought in his personal computer valued at RM5,000 into the business.
13 Accounts receivable, Safi returned goods worth RM500 due to wrong specifications.
15 The business bought goods for RM10,000 by cheque from Typo Electronics.
20 The owner took a microwave oven worth RM200 for his personal use.
22 Paid electricity bill RM1,500 by cash to Tenaga Nasional Berhad.
29 Sold goods to Marwani Enterprise RM7,500 by cheque.
31 Purchased a motor van worth RM50,000 on credit from HSL Finance.

Required:

(a) Prepare the necessary ledgers to record the July 2019 transactions of Kedai Elektrik Kami.
[19 marks]
(b) Prepare a trial balance of Kedai Elektrik Kami as at 31 July 2019.
[4 marks]
(c) Briefly explain the following source documents:
(i) Delivery order
(ii) Payment voucher.
[2 marks]
Question 5

Ashraf Muslim Enterprise started business on 1 January 2019. The transactions that took place
in the month of January 2019 were as follows:

January
1 Started the business with RM200,000 in the business bank account.
3 Bought machinery of RM5,000 from Zizan Trading on credit.
5 Withdrew money of RM1,000 from business bank account for personal use.
7 Purchased goods of RM600 from Bunga Enterprise by cheque.
11 Received a commission by cheque of RM14,000 from Mrs. Angeline Tan.
13 Sold goods to Luqman Ariff Sdn Bhd for RM15,000 on credit.
15 Purchased inventory from Pantai Selam on credit of RM25,000.
20 Luqman Ariff Sdn Bhd returned defective goods to the business worth RM700.
22 Paid workers’ salaries of RM9,000 by cheque.
29 Paid electricity to TNB by cheque of RM700.
31 Paid rental of RM5,000 to Mr. Malik Noor by cheque.

Required:

(d) Prepare the necessary ledgers to record the January 2019 transactions of Ashraf Muslim
Enterprise.
[18 marks]
(e) Prepare a trial balance of Ashraf Muslim Enterprise as at 31 January 2019.
[7 marks]
 Question 6

Below is the trial balance of Ramlah Trading as at 31 July 2019:

Debit (RM) Credit (RM)

Purchases and sales 185,000 280,000
Van 61,200
Equipment 15,000
Land at cost 110,000
Capital 440,200
Discounts 4,560 4,220
Commissions 2,600 5,500
Returns 500 2,000
Inventory as at 1 August 2018 58,000
Fixed deposit 78,000
Drawings 3,850
Electricity 8,960
Salaries 43,000
Rental 36,000
Insurance 12,000
Receivables and payables 74,800 40,040
Duty on purchases 1,800
Interest on loan 16,000
Goodwill 15,000
Trademarks 17,680
Interest on fixed deposit 3,900
Carriage outwards 5,300
Carriage inwards 6,400
5% loan from Bank Rakyat 50,000
Cash in hand 7,240
Cash at bank 52,400
General expenses 10,570
825,860 825,860

Closing inventory as at 31 July 2019 was RM63,000.

You are required to prepare:

a. Statement of Comprehensive Income for the year ended 31 July 2019

b. Statement of Financial Position as at 31 July 201
Question 7
The following is the trial balance of Syarikat TooEasy at 30 June 2019.

Debit Credit
RM RM
Capital 140,000
Debtors and creditors 6,400 5,100
Bank 1,500
Cash 850
Sales and purchases 65,000 93,100
Return inwards and outwards 1,850 1,300
Carriage inwards 250
Carriage outwards 285
Stock at 1 July 2009 6,800
Electricity and water 345
Wages and salaries 3,600
Advertisement 2,650
Insurance 800
Discount allowed and received 150 650
Bad debts 680
Provision for doubtful debts 450
Motor vehicles (at cost) 34,000
Provision for depreciation on motor vehicles 12,000
Fittings (at cost) 6,000
Provision for depreciation on fittings 1,200
Land and buildings 145,000
Commission received 360
Long term loan 20,000
Drawings 2,000
Rent received 1,000
276,660 276,660
The following information needs to be taken into account in the preparation of the final accounts:
2 Closing stock RM7,150
3 Commission received in advance amounted to RM60
4 Provision for doubtful debts is to made at 5% of debtors.
5 Insurance was prepaid amounted to RM270
6 Rent amounted to RM200 has not been received.
7 Electricity bill amounting to RM130 is still owing
8 Depreciation rate for the fixed assets are as follows:
• Motor vehicles - 20% reducing balance method
• Fittings - 10% straight line method

Required:

Prepare an Income Statement and a balance sheet for the year ending 30 June 2019 and a balance
sheet.

Question 8

The following accounts balances were extracted from the book of Ceria Selalu Trading for the year
ended 31 December 2019.

Debit (RM) Credit (RM)

Capital 517,800
Purchases and sales 720,000 1,078,530
Bank 86,000
Cash 15,200
Insurance on purchases 8,600
Plant and machinery 280,000
Motor vehicles 160,000
Office equipment 80,000
Land and buildings 280,000
Loan from Bank Kerjasama 100,000
Long term investment 20,000
 Carriage inwards 14,200
Inventory at 1 January 2019 42,400
Commission received 13,600
Return inwards and return outwards 19,000 8,000
Water and electricity 10,230
Telephone and internet 3,200
Rental income 9,600
Repairs on motor vehicles 2,800
Accounts receivable 90,500
Accounts payable 27,000
Salaries 33,900
Provision for doubtful debts 3,500
Mortgage on plant 20,800
Advertising 16,700
Dividend income 5,500
Accumulated depreciation:
Plant and machinery 50,400
Motor vehicles 48,000
1,882,730 1,882,730

Additional information:

1. Closing inventory as at 31 December 2019 was RM42,000.

2. The owner took goods worth RM600 and cash amounting to RM1,200 from the business for
personal use.
3. The owner decided to write off additional bad debts of RM4,500 when she discovered one of the
accounts receivable was in financial difficulties.
4. Provision for doubtful debts is to be made at 5% on the outstanding accounts receivable.
5. It is the company’s policy to depreciate its non-current assets as follows:
i. Plant and machinery - 20% on reducing balance method.
ii. Motor vehicles - 10% on straight line method.
iii. Office equipment – 10% on straight line method.
6. Electricity bill of RM500 was still accrued for the period.
7. Advertising expense amounting to RM1,500 was still owing.
8. The rental income worth RM1,000 per month.
9. Salaries paid in advance amounted to RM2,500.
Required:

(a) Briefly explain THREE (3) elements of statement of financial position.

[3 marks]

(b) Prepare an income statement of Ceria Selalu Trading for the year ended 31 December 2019.
[12 marks]

(c) Prepare a statement of financial position of Ceria Selalu Trading as at 31 December 2019.
[10 marks]

Question 9

The following balances were extracted from the books of Indah Enterprise as at 30 June 2019:

Debit Credit
(RM) (RM)
Purchases and sales 471,400 789,500
Shop premises 260,000
Motor van 75,800
Stock as at 1 July 2018 6,300
Returns 2,850 3,180
Debtors and creditors 75,520 84,400
10% loan from Bank Masyarakat 150,000
Discounts 8,100
Advertising 12,500
Commission received 6,500
Dividend received 3,000
Bad debts 3,200
Insurance 10,000
Interest on bank loan 7,500
Provision for doubtful debts 2,800
Carriage inwards 3,850
Carriage outwards 4,100
Bank 93,850
Cash 42,850
Salaries and wages 85,000
Drawings 10,000
Provision for depreciation - shop premises 25,000
 Provision for depreciation - motor van 18,500
Capital 89,940
1,172,820 1,172,820

Additional information:

10. Closing stock as at 30 June 2019 was RM10,500.

11. Provision for doubtful debts is to be made at 5% of total debtors.
12. Depreciation rates for the non-current assets are as follows:
iv. Shop premises - 10% on reducing balance method.
v. Motor van - 10% on straight line method.
13. Prepaid insurance amounted to RM3,000.
14. Advertising expenses amounting to RM1,000 is still owing.
15. Dividend amounted to RM1,500 has not been received.
16. Commission received in advance amounted to RM750.

Required:

(a) Prepare a statement of profit or loss of Indah Enterprise for the year ended 30 June 2019.
[12 marks]

(b) Prepare a statement of financial position of Indah Enterprise as at 30 June 2019.

[10 marks]

(c) List THREE (3) possible circumstances that might lead a company to write-off a debt as a bad
debt.
[3 marks]