hi... i need someone help me to solve my question below please..

COMPREHENSIVE CASE 3 Topic : Receivables & Payables MNM Appliances Bhd is one of the largest electrical and electronic distributors in Malaysia that was established in 1980s. MNM Appliances Bhd has been listed in Bursa Malaysia for the last ten years. Besides conventional way of selling goods via its outlets throughout the nation MNM Appliances Bhd also sell its goods online through its website. To ensure the latest amount of inventory and cost of goods sold is available at any point of time MNM Appliances Bhd is employing perpetual inventory system in managing and recording its inventory. The following is the extract of MNM Appliances Bhd's 2015 Draft of Statement of Financial Position of the current assets and current liabilities sections: 2015 RM 2015 RM 1 2014 RM 2014 RM Mr Akmal joined the company as a new head of accountant on 30 June 2015. The previous head of accountant left the company at the end of 2014. Mr Akmal have reviewed the draft account for 2015 and noticed that the company was in financial difficulties at the beginning of the year. Therefore, the company used its account receivables as a means of obtaining cash to continue its operations. The following is information related to selected activities for the month of January until March 2015. 15 Jan The clients Armada Bhd forwarded a notice to MNM Appliances Bhd asking for longer credit period. The sales amounting RM580,000 is for previous month sales. MNM Appliances Bhd agreed to extend the credit period and convert the remaining balance of account receivable to 10%, 120-day Note Receivable. 1 Feb MNM Appliances Bhd factored with recourse RM300,000 of account receivable for a cash proceed of RM280,000 to the Northern Bank Berhad. Northern Bank Berhad withheld 8% of account receivable as protection against sales return and allowance. The difference between factored account receivable and cash proceed is considered as a finance charge. 29 Feb Northern Bank Berhad manage to collect RM272,000 of the factored account receivable, which include sales return and allowance of RM11,000. The remaining balance of account receivable is uncollectible. Settlement of factored accounts receivable was done on this date. 1 March MNM Appliances Bhd assigned RM180,000 of its account receivable as collateral on a RM140,000, 12% loan from Northern Bank Berhad. A commission of 6% on the face amount of loan was charged. 30 March Collect RM148,000 of account receivable assigned and remitted it to Northern Bank Berhad. Mr Akmal retraced the recording of the above transactions and he finds out that the related transactions are properly recorded. Mr Akmal also performed extensive review on the \"notes to the accounts\". After reviewed the notes to the accounts for Trade and Other Receivables, Mr Akmal noticed that the allowance for bad debts expenses for 2015 remained the same as previous year. It provides clues to possible errors in recording. For the past few years, 5% of account receivables are estimated to be uncollectible and the company uses the percentage of receivables method to estimate the bad debt expense. The following is the notes to the accounts for trade and other receivables (20. Trade and Other Receivables): 20. Trade and Other Receivables 2015 2014 RM 3,300,000 RM 2,800,000 56,000 56,000 Other receivables, deposits and prepayment 3,244,000 176,880 2,744,000 222,771 Total 3,420,880 2,966,771 Trade receivables Less: allowance for bad debt expenses 2 After finishing review on the draft account, Mr Akmal realised that he have already achieved his target to increase the amount of sales. The report shows that the company's sales for 2015 increased to RM20 Million from RM15 Million in the previous period. Meanwhile, as the magnitude of its amount of annual sales is exceeding the threshold for the Goods and Services Tax (GST) MNM Appliances Bhd is required under the relevant act to be registered for GST starting 1 April 2015. The following are selected transactions that had taken placed in December 2015: 11 Dec Purchased 35 units of front-loader washing machine@RM1550 and 20 units of LCD television@RM1470 plus GST on credit from the manufacturer, Samson Bhd with terms 2/15, n/60. MNM Appliances Bhd paid freight cost of RM860 plus GST to ship these inventories to its warehouse. 14 Dec Sold 8 units of Elextroley microwave for RM1050 per unit (cost RM680 per unit) and 6 units of Pamsonsix air-conditioning for RM950 per unit (cost RM590 per unit) plus GST on credit to Maju Elektrik Sdn Bhd with terms 2/10, n/30. 22 Dec Returned to the manufacturer Samson Bhd, 2 defective units of front-loader washing machine bought at 11 December (Hint: Adjust the GST amount) and fully paid the remaining amount for that purchase. 23 Dec One unit of microwave that was sold on 14 December was returned by Maju Elektrik Sdn Bhd for credit (Hint: Adjust the GST amount). 26 Dec Received full payment from Maju Elektrik Sdn Bhd. MNM Alliances Bhd records sales and purchase at gross. The head of accounting department of the company, Mr Akmal, believes the amount of GST input credit/ receivable can be off set with the amount of GST output/payable in determining net amount of GST that need to be remitted to Malaysian Royal Custom. The tax manager of the company, however, argues that while this procedure has been practiced in some countries such as Australia, Malaysian government' approach is different. On the other hand, at the end of 2015 to grab a huge trade discount offered by several big manufacturers of electrical products MNM Appliances has placed several orders worth RM500 thousands. Half of these orders are non-cancellable with delivery in 60 days and full payment need to be made on delivery. The head of accounting department believes that the company should recognised orders that are noncancellable as current liability in 2015 financial statement. This amount is not yet included in the draft of the current liabilities section prepared above. MNM Appliances Bhd accounting year ends on 31 December. 3 REQUIRED: 1. Mr Akmal considered that the MNM Appliances Bhd has recorded properly its selected transaction for January 2015 until March 2015. How MNM Appliances Bhd actually records the transactions (prepare the journal entries). 2. Mr Akmal in a view that the information stated in the notes to the account for Trade and Other receivables provide clues to possible error in recording. Explain why he came to that conclusion. Prepare the adjusting entries to record the bad debt expenses for 2015. Show the updated notes to account for Trade and Other Receivables: 3. Goods and Services Tax (GST) has been introduced into Malaysia on 1 April 2015, which is part of the by Malaysian Government's tax reform package, to replace Sales and Services Tax (SST). (i) Discuss how GST is differs from SST in term of nature/scope, party that bear the tax and the rate (ii) Give TWO activities that are not subject to GST. 4. Prepare the journal entry for the selected transactions (December 2015) given in the case. 5. Do you agree with the head of accountant's (Mr Akmal) understanding over the approach to determine the amount of GST that should be remitted to the Malaysian Royal Custom? Explain. 6. Assume the total amount of GST output/ payable for 2015 (including the December's figure) is RM15,000. This figure is reported as part of trade and other payable item of MNM Appliances Bhd's 2015 draft of Comparative Statement of Financial Position above. Do you think this classification is correct? 7. Does the treatment to recognise orders that are non-cancellable as current liabilities in MNM Appliances Bhd's 2015 financial statement in line with the recognition criteria of a liability as provided under the Conceptual framework? 8. The bonds that are classified as current liability above are part of the bonds that will be matured in the next three years. Do you think why MNM Appliances Bhd's classify these portions of bonds as current liability? 4