1 The following is the trial balance of Zultan Trading on 31 December 2019. The following additional information as at 31 December 2019 is available: 1. Closing inventory is RM15,000. 2. Bad debts is RM150.Allowance for doubtful debts is 2% on accounts receivable. 3. Accrued assessment rate is RM600 4. Rental received each month is RM300 per month. Required: (a) Make Statement of Profit or Loss for the year ending 31 December 2019. (13 marks) (b) Make Statement of Financial Position as at 31 December 2019. (12 marks) All relevant workings must be shown out. [Total: 25 Marks] Question 2 The following information represents the cash transactions of James for the month of September 2019. 2019 September 1 Balances brought forward: Cash RM2,480; Bank RM28,568. 2 The following paid their accounts by cheque, in each case deducting 5 per cent cash discount: - Red RM1,040 - Parker RM1,280 4 Paid building expenses by cheque RM1,720. 6 Fong lent us RM20,000 paying by cheque. 8 James paid the following accounts by cheque in each case deducting a 2 per cent cash discount: - Gan RM3,840 - Lenny RM6,400 10 Paid electric bill in cash RM324. 12 Jack pays his account of RM360, by cheque RM352, deducting RM8 cash discount. 15 Paid salary in cash RM2,320. 18 The following paid their accounts by cheque, in each case deducting 5 per cent cash discount: - Annie RM2,160 - Bee RM2,800 21 Cash withdrawn from the bank RM1,600 for business use. 24 Cash drawings RM800. 25 Paid Wan his account of RM640, by cash RM620, having deducted RM20 cash discount. 29 Bought furniture paying by cheque RM2,880. 30 Received rent by cheque RM480. Required: (a) Write up a three-column cash book for James based on the above given details and balanced-off. (16 marks) (b) Show the relevant discount accounts in the general ledger. (4 marks) (c) Explain the definition of capital expenditure with example. (5 marks) [Total: 25 Marks] Question 3 (a) Define the terms capital expenditures and revenue expenditures. What determines whether an item is a capital or revenue expenditure? (5 marks) (b) The accounting practices in each of the following situations are in accordance with accounting standards and accepted good practices. Identify all the accounting concepts and principles that form the basis for each accounting practice. Provide an explanation as to why they apply. (i) A pet shop accrues employee salaries at year end even though the salaries will be paid during the first few days of the new year. (5 marks) (ii) Assets are reported at liquidation value on the financial statements of a supermarket that is going out of business. (5 marks) (iii) Depreciation of the head office building is difficult to relate to particular sales. Therefore, the firm records depreciation expense on a time basis. (5 marks) (iv) A busines wishes to change its method of accounting for revenue. However, the business does not switch because it wants to use the same accounting method that other businesses in the industry use. (5 marks) [Total: 25 Marks] Question 4 (a) M May owns a small textile business. Her financial year ended on 31 December 2019. Before preparing the financial statements at year end, M May noted the following items for adjustments. Required: Write up the ledger accounts for the items below including the balance transferred to the necessary part of the financial statements, also showing the balances carried down to 2020. (i) Travelling expenses: Paid for the year to 31 December 2019 RM480; Owing at 31 December 2018 RM42; Owing at 31 December 2019 RM70. (5 marks) (ii) Stationery expenses: Paid for the year to 31 December 2019 RM250; Owing as at 31 December 2018 RM70; Owing as at 31 December 2019 RM105. (5 marks) (iii) Electricity & Water bills: Paid in the year to 31 December 2019 RM1,000; Bills owing at 31 December 2018 RM230; Bills paid in advance at 31December 2019 RM380. (5 marks) (b) How to identify the accrued expenses? (5 marks) (c) Explain how the prepayments in the business transactions works. (5 marks) [Total: 25 Marks]