QUESTION 1

Metro Book Company located in Subang Jaya uses a continuous inventory system. The company closes its accounts at the end of each year. The remaining balance of the account as at 30 November 2015 is as follows:

Cash	14000
Account Not Yet Received	27600
Merchandise Inventory	27500
Store Equipment	42000
Depreciation provision - store equipment	9000
Accounts Payable	31200
Capital, Azim	45700
Withrawal, Azim	5000
Sales	244500
Allowance and sales return	4600
Sales Discount	3900
the cost of merchandise sold	172000
Salaries	27700
Utilities	6100

The following are the transactions entered into by Metro Book Company during the month of December 2015

Dec	1	Purchase merchandise on credit from Syarikat Ilmu RM10500; FOB destination terms, 1/10, n/30. The transportation cost is RM400
	2	Selling merchandise on credit to Syarikat Pelita, RM4500; FOB terms of shipping point, 2/15, n/30. The cost of merchandise sold is RM2250
	5	Return merchandise purchased from Syarikat Ilmu on 1 December, RM400
	9	Received a return of RM350 from Syarikat Pelita for sale on 2 December. The cost of returned merchandise is RM175
	11	Received cash from Pelita Company for sale on 2 December
	16	Pay to Syarikat Ilmu for purchases made on 1 December
	26	Aqil took a book from Metro Book Company to give to his daughter. The cost of the book is RM90

1. Prepare journal entries and adjustment entries to record transactions that occurred during December 2015
2. Prepare the income statement for the year ended 31 December 215, and the balance sheet as at 31 December 2015 for Metro Book Company
3. Briefly explain the two advantages of using a continuous inventory system