emergency
Q1. Nine Eleven Trading is a mini market owning by your best friend Bobby who has been preparing the accounts and financial statements for the business. Recently, as he is too busy with the expansion of his business, he hired you as the accountant to assist him. At the first day of your work, you are being presented the following list of accounts for the year ended 31 December 2020. He hopes that you could help him in finalising the accounts and prepare the financial statements subsequently. Accounts RM Accumulated depreciation as at 1 January 2020: Equipment 55,000 Motor vehicles 28.000 Allowance for doubtful debts as at 1 January 2020 16.000 Bad debts 5,000 Bank 300,000 Capital as at 1 January 2020 999,000 Cash 50,000 Commission revenue 30,000 Equipment 450,000 Interest expense 40,000 Inventory as at 1 January 2020 154,000 Loan from Tiger Bank @ 10% 400,000 Motor vehicles 190,000 Premises 512,000 Prepaid commission revenue as at 31 December 2020 1,000 Prepaid salaries as at 1 January 2020 4.000 Purchases 712,000 Purchases return 78,000 Rental revenue 12,000 Salaries 96,000 Sales 995,000 Sales retum 115,000 Trade payables 199,000 Trade receivables 200,000 After going through the accounts in detail, you discovered that there are several issues in the draft Trial Balance that need to be addressed before the financial statements could be prepared. Among the issues, it was found that there were several errors made. Therefore, a suspense account must be prepared in order to clear these errors. Q1. (Continued) Other than the errors, several items that are yet to be accounted for have newly emerged. Following is a summary of the newly emerged items and errors that should be taken into the accounts for the year ended 31 December 2020: (1) Bobby bought fire insurance for his business on 1 December 2020. He paid an annual premium of RM12,000 to the insurance company through the business cash account. (2) The closing inventory was valued at RM166,000. (3) During the year, Bobby bought a new motor vehicle that cost RM140,000 for business usage. He paid half through the business bank account and another half through his personal bank account. One of the trade receivables was declared bankrupt by the court. Bobby has no choice but to write off his owing amount of RM500. (4) (5) Equipment is to be depreciated at 15% per annum by using the reducing balance method, while motor vehicles are to be depreciated at 10% per annum by using the straight line method. (6) An allowance for doubtful debts of 5% for the trade receivables was decided. (7) A cash sale of RM7,000 was wrongly debited into the purchases account as RM8,000. However, the transaction was correctly captured in the cash account. REQUIRED: (a) Prepare the organised UNADJUSTED Trial Balance as at 31 December 2020. (13 marks) (b) Prepare the double entries to incorporate the above items into the accounts of Nine Eleven Trading (narrations are not required). (12 marks) Prepare the Statement of Comprehensive Income for the year ended 31 December 2020 (use the vertical format presentation). (12 marks) Prepare the Statement of Financial Position as at 31 December 2020 (use the vertical format presentation) (12 marks) Evaluate the financial performance of Nine Eleven Trading. (6 marks)
