Sharin Sdn Bhd is in the business of sheep farming. In January 2012, a herd of 400 sheep aged two years old was imported from Australia at a cost of RM300 per sheep. The only change in 2012 was increase in physical attributes due to ageing from two to three years.

On January 1, 2013, Sharin Sdn Bhd purchased another herd of 800 sheep, aged one-month old, at a price of RM100 per sheep. Transportation costs amounted to RM16,000. In February 2013, two of the sheep aged 3 years old were found dead by a worker. During 2013, the company slaughtered 350 of the 3 year-old sheep and their mutton were sold for RM1,000 per sheep. Expenses incurred for the year ended December 31, 2003 are as follow:

Feed costs and farming suppliesRM40,000

Farm labour and supervision30,000

Depreciation of farm buildings and facilities9,000

Relevant fair values per sheep are as follows:

REQUIRED:

(a)Prepare the journal entries for the above transactions for year 2012 and 2013.

(6 Marks)

(b)Draft the income statement of Sharin Sdn Bhd for the year ended 31 December 2013.

(4 Marks)

Please answer with the calculation

Age FV per sheep as at 31 December FV per sheep as at 31 December 2012 (RM) 2013 (RM) One month 150 One year 250 300 Two years 350 400 Three years 450 500 Four 550 600