Mr. Sabri Salleh worked as an accountant with Saderi Company for the past seven years. His sudden death due to Covid 19, had affected accounting closing preparation for Saderi Company. Before his death, he managed to prepare a halfway unadjusted trial balance as of December 31, 2020, with several items are still in various respective ledger accounts.

Incomplete and Unadjusted Trial Balance

as at December 31, 2020

Debit (RM) Credit (RM)

Property, plant and equipment 380,000

Accumulated depreciation 213,400 Cash 133,800

Accounts receivable 53,950

Inventories, December 31, 2020 260,000

10% Long-term Islamic investments 100,000

Accounts payable 39,800 Sales revenue 970,000 Ordinary shares capital 320,000 Administrative expense 67,500

Selling expense 91,000

Other expenses 21,000

Retained earnings, December 31, 2020 167,000

Various balances that are still in ledgers: Patent RM80,000; Prepaid expense RM27,000; Allowance for doubtful account RM1,900; Sukuk (long-term debt) RM150,000; Unearned revenue RM80,000; Cost of goods sold RM712,000; Supplies RM10,000; and Income tax expense RM5,850.

To make it worst, there are several transactions yet to be accounted for at year end, December 31, 2020, as follow:

a. Documents showed that 60% of the unearned sales revenue has been earned in 2020.

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c. One of the customers, XYZ Sdn, Bhd., was declared bankrupt and RM1,400 of its account receivable balance is to be written-off. It is also estimated that due to the prolonged pandemic, as high as 30% of the outstanding account receivable is uncollectible at year end.

d. ,W LV WKH FRPSDQ\V SROLF\ WKDW GHSUHFLDWLRQ LV WR EH SURYLGHG RQ WKH FRPSDQ\V property, plant and equipment at the rate of 10% on cost.

e. Despite the challenging economy, the board of directors of Saderi Company declared 5% dividends on its ordinary shares which is to be paid on 10 January 2021.

f. Hibah (interest) on the 10% long-term Islamic investment is accrued at year-end. The investment was made on September 1, 2020.

g. On July 1, 2020, Saderi Company sold for RM35,000 equipment which originally cost RM48,000. Accumulated depreciation on this equipment at

4

January 1, 2020, was RM19,200.

h. The patent was acquired on March 31, 2020, and has a useful life of ten years. i. The company purchased a new lorry in December 2020 for RM160,000 and signed a note payable for the amount. No depreciation is allocated in the year of acquisition.

j. Prepaid expense expired into administrative expense amounted to RM12,000.

Required:

1. Journalize the above transactions from (a) to (j).

(8 marks)

2. Prepare the Statement of Profit or Loss and Other Comprehensive Income, and Statement of Changes in Equity for the year ended December 31, 2020, and a Statement of Financial Position as at December 31, 2020.