Explain and show how the following transactions would be reported in the financial statements; a) On 1 January 2020, K supplied goods on credit to a customer. The goods had a list price of RM 450,000. Due to the size of the order, the customer received a volume discount of RM 50,000 and the invoice to the customer showed an amount payable of RM 400,000. The terms of sale allowed the customer a prompt payment discount of RM 20,000 provided payment was made before 31 January 2020. On 30 January 2020, the customer paid RM 380,000 in full and final settlement of the amount payable. (10 marks) b) On 1 April 2017, DT subscribed for 40 million RM 1 loan notes in Eps. The loan notes were issued at 90 cents and under the terms of issue were redeemable at RM 1.20 on 31 March 2020. Interest is payable on 31 March in arrears at 4% of par value. This represents an effective annual rate of return for DT of 9.9%. DT's intention is to hold the loan notes until redemption. Until 31 October 2018 Eps was a successful company with a good reputation for settling all its liabilities on their due dates. However, due to an event which occurred on 31 October 2018, three of Eps's major customers became insolvent and this caused liquidity problems for Eps. During November 2018 Eps entered into negotiations with all its creditors, including DT. DT agreed to forego the interest payments due on 31 March 2018 and 2019, with the payments from 31 March 2020 onwards resuming as normal. Explain and show how the following transactions would be reported in the financial statements; a) On 1 January 2020, K supplied goods on credit to a customer. The goods had a list price of RM 450,000. Due to the size of the order, the customer received a volume discount of RM 50,000 and the invoice to the customer showed an amount payable of RM 400,000. The terms of sale allowed the customer a prompt payment discount of RM 20,000 provided payment was made before 31 January 2020. On 30 January 2020, the customer paid RM 380,000 in full and final settlement of the amount payable. (10 marks) b) On 1 April 2017, DT subscribed for 40 million RM 1 loan notes in Eps. The loan notes were issued at 90 cents and under the terms of issue were redeemable at RM 1.20 on 31 March 2020. Interest is payable on 31 March in arrears at 4% of par value. This represents an effective annual rate of return for DT of 9.9%. DT's intention is to hold the loan notes until redemption. Until 31 October 2018 Eps was a successful company with a good reputation for settling all its liabilities on their due dates. However, due to an event which occurred on 31 October 2018, three of Eps's major customers became insolvent and this caused liquidity problems for Eps. During November 2018 Eps entered into negotiations with all its creditors, including DT. DT agreed to forego the interest payments due on 31 March 2018 and 2019, with the payments from 31 March 2020 onwards resuming as normal
