Case Study 1: The following trial balance relates to Appleland Sdn Bhd as at 31st March 2022: Debit RM'000 Credit RM'000 550,000 403,500 21,500 30,900 700 1,200 50,000 11,200 60,000 Revenue (note ()) Cost of sales Distribution cost Administrative expenses Interest expense Provision for taxation (note (iv)). Ordinary share at RM0.50 each Retained earnings as at 1.4.2021 Land and Buildings - at cost (land is RM10 million) (note (ii) Plant and equipment -at cost (note (i)) Accumulated depreciation: Buildings as at 1.4.2021 plant and equipment as at 1.4.2021 Closing stock as at 31st March 2022 Accounts Receivable Bank Deferred tax Accounts Payable and Provision 94,500 20,000 24,500 43,700 42,200 8,000 3,000 45,100 705,000 705,000 ======== ======= The following notes are relevant: (i) Sales Revenue: Revenue includes a credit sale of RM5 million of goods made to a new customer on 1st February 2022 and its related cost of the goods at the date of sale was RM3.5 million. In view of it is a new customer, the marketing director allows this customer to return the goods to Appleland Sdn Bhd at any time within three months of the sale. No sales return is allowed after the time lapse. (ii) Non-Current Assets: On 1st October 2021, Appleland Sdn Bhd terminated the production of one of its product lines. From this date, the plants used to manufacture the product has been disposed of at an advertised price of RM8.4 million which is considered realistic. It is included in the trial balance at a cost of RM18 million with accumulated depreciation as at 1st April 2021 of RM10 million. On 31st March 2022, the directors of Appleland Sdn Bhd decided that the financial statements would show an improved position if the land and buildings were revalued to market value. At that date, an independent valuer valued the land at RM12 million and the buildings at RM35 million and these valuations were accepted by the directors. The remaining life of the buildings as at 1st April 2021 was 10 years. Appleland Sdn Bhd did not make a transfer to retained earnings for excess depreciation. Ignore deferred tax on the revaluation of assets. Plant and equipment is depreciated at 15% per annum using the reducing balance method and time apportioned as appropriate. All depreciation is charged to cost of sales, but none has yet been charged on any non-current asset for the year ended 31st March 2022. (iii) Dividend Paid: On 31st March 2022, director of Appleland Sdn Bhd paid a dividend of RM0.01 per share to all its ordinary shareholders but this transaction was omitted from the financial record. (iv) Income Tax: Appleland Sdn Bhd estimates that an income tax provision of RM14.2 million is required for the year ended 31st March 2022. The balance on current tax in the trial balance represents the under / overprovision of the tax liability for the year ended 31st March 2021. Red red: a) Prepare the journal entries with narrative note to record all the transactions as stated above. (35 marks) b) Prepare the statement of profit or loss and other comprehensive income for the year ended 31st March 2022 of Appleland Sdn Bhd. (16 marks) c) Prepare the statement of changes in equity as at 31st March 2022 for Appleland Sdn Bhd. (7 marks) d) Prepare the statement of financial position as at 31st March 2022 for Appleland Sdn Bhd. (22 marks) e) Explain the accounting treatment in respect of Note 1. (7 marks)
