QUESTION 1 The following trial balance was extracted from the ledger of ABC Trading Sdn. Bhd., a hypermarket, on 31 October 2019: RM RM Sales revenue 3.121.XX Inventories at 1" November 2018 175.000 Purchases 1.287.000 Distribution costs 310.000 Administrative expenses 353,500 Other operating expenses 145.000 Other operating income 350.0XX) Land and building 1.000.000 Land and building accumulated depreciation 160.XX) Plant and machinery 726.400 Plant and machinery accumulated depreciation 326.XX Investment properties 321.000 Intangible assets 100,000 Biological assets 550.000 Trade receivables 44,000 Cash and bank balonces 238.000 Share capital 700.0XX) 8% Bank ban 200.0XX) Retained earnings at 1" November 2018 327,200 Finance cost 12,000 Tax expense 140,300 Dividends expense 80,000 Accounts payable 198 XXX 5,482,200 5,482,200 The following information is available at year end and has yet to be accounted for 1) After the 31 October 2019 stocktake, a comparison of the weighted average cost method adopted by the company in valuing its inventory and the net realizable value of each item was undertaken. Net realizable value was estimated on the general patter of sales and discounts. However, due to the miscalculations in purchasing, it was discovered that two lines of inventories would have to be sold at substantial discounts. The book value of the inventory counted during the stocktake was RM285,000 but RM120,0XX) of the amounts had to be sold at 50% discounts. 2 ii) The company's policy is to charge depreciation at 15% per year on the straight line basis for plant and machinery Building, which cost RM 800,000, has 50 years estimated useful life. On 1" November 2018 the building was revalued for the first time after 10 years of usage. It was revalued at RM680,6X0. On 31 October 2019, the building was again revalued at RM650,000. The revaluation exercises have not been updated in the company's accounting record. iv) In expanding its business horizon, ABC Trading decided to start cattle raising business During the year, the company purchased 500 mature cattle and 200 young cattle at RM900 and RM500 per unit respectively. It was estimated that the fair values of the cattle in the market on 31 October 2019 were RM1,050 and RM550 per unit for mature and young cattle respectively. The company also estimated that commission to denlers is about RM10,000 if they decide to sell the cattle and the transportation cost to bring the cattle to the market was about RM30,000. v ABC Trading owns a two-storey building in Muar, which was rented to small retailers in the area. The property is appraised every year and has useful life of 25 years. The company adopted the fair value model in reporting its investment properties. As at 31" October 2019, the fair value of the building was RM300,000 vi) The intangible assets consist of the followings: Patent, carrying amounts RM45,000 Trademarks, at cost RM40,000 Legal fees RM5,000 The patent was purchased in November 2017 for RM50,000 and has an expected useful life of 10 years. The trademark was acquired this year with expected useful lives of 5 years. The legal fees were incurred to defend the patent against infringement by another company The current year's amortization has not been recorded. Unpaid salaries at year end was RM15,000 and the interest on bank loan for the year has not been paid fully Required: a) Prepare for ABC Trading Sdn. Bhd.: Statement of Profit or Less and Other Comprehensive Income for the year ended 31" October 2019 (12 marks) Statement of Changes in Equity for the year ended 31 October 2019 (7 marks) Statement of Financial Position as at 31 October 2019. (Il marks) Please show all your workings. (Total 30 marks) vii) 3 QUESTION 1 The following trial balance was extracted from the ledger of ABC Trading Sdn. Bhd., a hypermarket, on 31 October 2019: RM RM Sales revenue 3.121.XX Inventories at 1" November 2018 175.000 Purchases 1.287.000 Distribution costs 310.000 Administrative expenses 353,500 Other operating expenses 145.000 Other operating income 350.0XX) Land and building 1.000.000 Land and building accumulated depreciation 160.XX) Plant and machinery 726.400 Plant and machinery accumulated depreciation 326.XX Investment properties 321.000 Intangible assets 100,000 Biological assets 550.000 Trade receivables 44,000 Cash and bank balonces 238.000 Share capital 700.0XX) 8% Bank ban 200.0XX) Retained earnings at 1" November 2018 327,200 Finance cost 12,000 Tax expense 140,300 Dividends expense 80,000 Accounts payable 198 XXX 5,482,200 5,482,200 The following information is available at year end and has yet to be accounted for 1) After the 31 October 2019 stocktake, a comparison of the weighted average cost method adopted by the company in valuing its inventory and the net realizable value of each item was undertaken. Net realizable value was estimated on the general patter of sales and discounts. However, due to the miscalculations in purchasing, it was discovered that two lines of inventories would have to be sold at substantial discounts. The book value of the inventory counted during the stocktake was RM285,000 but RM120,0XX) of the amounts had to be sold at 50% discounts. 2 ii) The company's policy is to charge depreciation at 15% per year on the straight line basis for plant and machinery Building, which cost RM 800,000, has 50 years estimated useful life. On 1" November 2018 the building was revalued for the first time after 10 years of usage. It was revalued at RM680,6X0. On 31 October 2019, the building was again revalued at RM650,000. The revaluation exercises have not been updated in the company's accounting record. iv) In expanding its business horizon, ABC Trading decided to start cattle raising business During the year, the company purchased 500 mature cattle and 200 young cattle at RM900 and RM500 per unit respectively. It was estimated that the fair values of the cattle in the market on 31 October 2019 were RM1,050 and RM550 per unit for mature and young cattle respectively. The company also estimated that commission to denlers is about RM10,000 if they decide to sell the cattle and the transportation cost to bring the cattle to the market was about RM30,000. v ABC Trading owns a two-storey building in Muar, which was rented to small retailers in the area. The property is appraised every year and has useful life of 25 years. The company adopted the fair value model in reporting its investment properties. As at 31" October 2019, the fair value of the building was RM300,000 vi) The intangible assets consist of the followings: Patent, carrying amounts RM45,000 Trademarks, at cost RM40,000 Legal fees RM5,000 The patent was purchased in November 2017 for RM50,000 and has an expected useful life of 10 years. The trademark was acquired this year with expected useful lives of 5 years. The legal fees were incurred to defend the patent against infringement by another company The current year's amortization has not been recorded. Unpaid salaries at year end was RM15,000 and the interest on bank loan for the year has not been paid fully Required: a) Prepare for ABC Trading Sdn. Bhd.: Statement of Profit or Less and Other Comprehensive Income for the year ended 31" October 2019 (12 marks) Statement of Changes in Equity for the year ended 31 October 2019 (7 marks) Statement of Financial Position as at 31 October 2019. (Il marks) Please show all your workings. (Total 30 marks) vii) 3