Question

Trial Balance of Mr$.$ Tang on $31$st December $2024$

RM RM

Sales revenue $590,000$

Purchases $355,000$

Inventory at $1$st January $202435,000$

Salaries $82,000$

Postage and stationery $2,000$

Telephone $1,500$

Directors$$ fees $35,000$

Rent and rates $21,000$

Insurance $13,000$

Office heat and light $5,000$

Legal fees $12,000$

Buildings $($cost$)200,000$

Plant and Machinery $($cost$)60,000$

Motor Vehicles $($cost$)68,000$

Provision for depreciation of buildings $32,000$

Provision for depreciation of plant and machinery $34,000$

Provision for depreciation of motor vehicles $15,000$

Trade receivables $29,000$

Trade payables $14,000$

Provision for doubtful debts

Capital $3,000$

$10,500$

$6\%$ Loan account $150,000$

Loan account $2160,000$

Bank overdraft $10,000$

$918,500918,500$

You are given the following information

a$)$ Inventory at $31$st December $2024$ was valued at RM$40,000$

b$)$ Provide for depreciation as follows:

$$ Buildings, $5\%$ of book value $($reducing balance$)$

$$ Plant and machinery, $20\%$ of cost

$$ Motor vehicles, $25\%$ of cost

c$)$ Provide for legal fees outstanding of RM$5,000$

d$)$ Telephone prepaid is RM$800$

e$)$ It is agreed that provision for doubtful debt should reduced by RM$2,000.$

f$)$ To provide for loan interest of $6\%$ of loan account $1$

Required:

Task $1$: Prepare the journal entries for adjustments $($b$)$ to $($f$)$ mentioned in the additional information

Task $2$: Prepare the adjusted trial balance on $31$st December $2024$

Task $3$: Prepare the Statement of Income Statement for the year ending $31$st December $2024($after adjustments$)$

Task $4$: Prepare the Statement of Financial Position as at $31$st December $2024($after adjustments$)$

Task $5$: Provide TWO $(2)$ explanations on the importance of the Statement of Profit and Loss and Statement of Financial Position to the users of the accounting information. Your answer should include the explanation on how these TWO $(2)$ statements help the users in making decision.

Task $6$: Explain in detail the concept of accrual accounting.