Question
Financial Statements Kung Fu is a retail business. It draws up its financial statements once a year. It has been using the periodic inventory system
Financial Statements
Kung Fu is a retail business. It draws up its financial statements once a year. It has been using the periodic inventory system since the beginning. Its financial year is the end of February each year. A trial balance as at 28 February 2023 is shown below:
Kung Fu: Trial balance as at 28 February 2023
Details | DR RM'000 | CR RM'000 |
Accounts payable | 380 | |
Accounts receivable | 508 | |
Accumulated depreciation, at 01.March.2022 | ||
building | 70 | |
office equipment | 80 | |
Advertising expense | 10 | |
Allowance for doubtful debts | 17 | |
Capital | 710 | |
Cash at bank | 38 | |
Discount allowed | 20 | |
Discount received | 30 | |
Drawings | 65 | |
Insurance expense | 33 | |
Interest expense | 11 | |
Inventory 01 March 2022 | 143 | |
Land and building | 650 | |
Lighting and Power expense | 52 | |
Miscellaneous operating expenses | 25 | |
Notes payable, due in 2026 | 120 | |
Office equipment, at cost | 200 | |
Prepaid insurance | 36 | |
Purchases | 852 | |
Salaries and wages expenses | 217 | |
Sales | 1593 | |
Sales return | 47 | |
Transport inwards expense | 18 | |
Transport outwards expense | 75 | |
Total | 3,000 | 3,000 |
Additional information:
i The prepaid insurance indicated in the above is valid from 01 February 2023 to 31 January 2024.
ii The depreciation charges for building RM6,000 and for office equipment RM40,000 for the financial year had not yet been adjusted.
iii The Allowance for Doubtful Debts should be increased to RM20,000.
iv On 15 February 2023, Kung Fu advertised its products in the local newspaper. The advertisement cost of RM2,000 was given a credit period of 30 days. No entry was made at all for this transaction.
v A physical inventory count was taken at the end of the day on 28 February 2023 and it valued at RM123,000.
a) Prepare a detailed profit or loss statement for the year ended 28 February 2023
b) A statement of owners equity for the year and a statement of financial position as at 28 February 2023.
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