DOUBLE ENTRY AND TRIAL BALANCE

Vincent owns a printer shop, Heartbreaker Ltd$.$ For the month of November $2023,$ the transactions were as follows:

November $2023$

$1$ Commenced business with RM$3,000$ in the bank.

$2$ Purchased goods on credit from the following: Alvin RM$300,$ Bachan RM$250$ and Sunita RM$170.$

$4$ Purchased furniture from Jati World RM$600$ on credit.

$5$ Sold goods on credit to: Jason RM$70,$ Devi RM$150,$ Yoon RM$50.$

$7$ Cash sales RM$85.$

$10$ Bought goods for cash RM$120.$

$12$ Returned goods to Bachan RM$100.$

$13$ Paid Jati World RM$600$ by cheque.

$15$ Bought goods on credit from: Alvin RM$50$ and Sunita RM$30.$

$16$ Paid Alvin by cheque RM$300.$

$18$ Sold goods on credit to: Devi RM$50$ and Yoon RM$100.$

$21$ Yoon settled his debt RM$150$ by cheque.

$22$ Goods returned to Sunita RM$50.$

$23$ William lent the business RM$500$ by cash.

$26$ Purchased a furniture paying by cheque RM$250.$

$27$ Paid wages by cheque RM$1,000.$

$28$ Paid electricity bill by cash RM$120.$

$30$ Paid wages by cheques RM$500.$

Required:

$($a$)$ Define accounting cycle and describe the steps in the accounting cycle. Draw a diagram or flow chart to illustrate your understanding of the accounting process.

$($b$)$ Record the transactions above for the month of November in appropriate ledger.

$($c$)$ Balance$-$off all the accounts.

$($d$)$ Extract a trial balance.

FINAL ACCOUNTS

The following Trial Balance was extracted from the books of Aries Technology at $31$ December $2022$:

Dr $($RM$)$ Cr $($RM$)$

Capital $30,000$

Carriage inwards $600$

Carriage outwards $2,720$

Purchases and sales $143,500260,200$

Office equipment $20,000$

Motor vehicle $17,000$

Wages and salaries $62,500$

Lighting and heating $8,500$

Rent and rates $6,700$

Vehicle running costs $4,000$

Telephone expenses $11,000$

General office expenses $6,180$

Trade receivable $30,000$

Trade payable $28,570$

Provision for depreciation

Motor vehicle $6,800$

Office equipment $10,000$

Drawings $10,000$

Bank $6,070$

Cash $300$

Inventory $(1$ January $2022)8,000$

Returns Inwards and Outwards $1,5003,000$

$338,570338,570$

Closing inventory on $31$ December $2022$ was RM$10,000.$

Required:

$($e$)$ Prepare an Income Statement and Balance Sheet for the year ended $31$ December $2022.$

$($f$)$ The management of Aries Technology is not happy with the current profit. What can you suggest to improve the cash flow and profitability of the business?

$($g$)$ Who could be the users of financial information provided by

Aries Technology and why such information is important to them?