SECTION B- ANSWER ALL QUESTIONS Question 1 Mutiara Sdn. Berhad is a trading company and the company operates in a rented shop space in Damansara. The following information is the company's unadjusted ycar-end trial balance dated December 31", 2017. Mutiara Sdn. Berhad Unadjusted Trial Balance as at 31 December, 2017 RM RM Accounts receivable 690,000 10,500 Allowance for doubtful debt Accounts payable 242,000 Administrative expense Cash and cash equivalent Cost of goods sold 175,000 79,079 620,000 Income tax expense 26,000 60,000 5,5% 5-year investment 150,000 Merchandise inventory (December 31, 2017) 100,000 Freehold land 161,360 Machinery and equipment Accumulated depreciation: machinery and equipment 19,760 Ordinary dividend Ordinary share capital 66,000 200,000 20,000 Patent, net 100,000 8% Bonds payable 5 years 3,221 Discount on bonds payable 110,540 Retained earmings (January 1. 2017) 18,000 Rent revenue 154,000 Revaluation reserve (January 1, 2017) 1,480,000 Sales revenue 40,000 Sales returns and allowances Selling expense Supplies 140,000 4,140 2,334,800 2,334,800 At the end of the accounting period, the following transactions were unrecorded and need to be adjusted in the ledger accounts. 1. Selling expense accrued at year end amounted to RM22.000. 2. Supplies purchased during the year amounted to RM4,140. This amount was recorded in the supplies account. Supplics unused at year end amounted to RM1,840. Supplies used is part of administrative expense. 3. New shares were issued to shareholders and all shares were paid in full, RM200,000. 4. The land has a fair value of RM80,000 more than its carrying value. 5. At year-end accounts receivable written-off amounted to RM2,300. Allowance for doubtful debt is estimated at 2% of ending account receivable balance. Bad debt Fupplies on hand expense is treated as a selling expense. 6. Full year interest on the 5.5% long-term investment is unrecorded at year end. 7. The machinery and equipment is depreciated at the rate of 15% per year using the diminishing balance method. The company charges depreciation of machinery and equipment as cost of goods sold. Required: (a) Journalise transactions (1) - (7) above. (6 marks) (b) Prepare: A Statement of Profit or Loss and Other Comprehensive Income for the year i) ended 31 December 2017. ii) A Statement of Changes in Equity for the year ended 3I December 2017 iii) A Statement of Financial Position as at 31 December 2017 for Mutiara Sdn Berhad. (18 marks) (c) Financial statements, other than the statement of cash flows, are prepared using the accrual basis of accounting How are revenue and expense items recognised and recorded in the financial statements? (2 marks) (Total : 26 marks]