Exercise 1

The following Trial Balance was extracted from the books of Max Enterprise as at 31 December 2020.

	Dr (RM)	Cr (RM)
Capital	_	260,248
Carriage inwards	2,900	_
Carriage outwards	8,200	_
Bad debts	12,500	_
Drawings	12,100	_
Motor Vehicle	110,100	_
Provision for Depreciation Motor Vehicle	_	13,605
Truck	93,000	_
Provision for Depreciation Truck	_	6,150
Debtors	80,000	_
Bank	30,700	_
Cash	26,000	_
Rent received	_	9,700
Purchases	125,000	_
Salary	72,060	_
Stock as at 31-12-2019	95,000	_
Creditors	_	78,000
Advertising expenses	22,200	_
Telephone charges	11,800	_
Commission Received	_	18,000
Sales	_	343,757
Returns	17,400	5,000
Stationeries	15,500	_
Total	734,460	734,460

The following adjustments are to be taken into account:

a) Stock as at 31 December 2020 was valued at RM 50,000.

b) Bad debt to be written off was RM 3,000.

c) The depreciation allocated for the current year were as follows:

Motor Vehicle 20% per annum at cost.

Truck 10% per annum at cost.

d) Rent received still outstanding of RM 700.

e) Salary paid in advanced was RM 1,600.

You are required to prepare:

1) Income statement for the year ended 31 December 2020.

2) Balance sheet as at 31 December 2020.