SUBJECT NAME: BUSINESS ACCOUNTING
Q1. Mrs Zenia, a sole trader, who runs a kitchen and cookware shop called "Master Cooking Enterprise'. She would like to offer you a job as her junior accountant. Hence, she asked you to prepare a full set of financial statements before the recruitment to make sure that you are qualified. The following accounts have been extracted from Mrs Zenia's business records as at 30 June 2020. RM Capital 100,000 Drawings 4,700 Sales 806,500 Purchases 498,700 Retum inwards 20,500 Retum outwards 30,000 Carriage expenses 15,900 Office equipment 85,000 Motor vehicles 70,000 Premises 95.000 Accumulated depreciation as at 1 July 2019: Office equipment 17.000 Motor vehicles 14,000 12% Loan from Citibank 120,000 Cash at bank 60,000 Cash in hand 8,500 Rental expenses 43,600 Utilities bills 26,400 Insurance 24,000 Salaries and wages 55,700 Interest on loan 14,400 Bad debts 16.800 Discount allowed 37,600 Discount received 55,700 Commission received 36.800 Allowance for doubtful debts as at 1 July 2019 5,600 Inventory as at 1 July 2019 134,000 Account receivables 43,700 Account payables 68.900 During preparation of financial statements, there are several issues were found and the adjustments of particular items are required. The following information must be taken into account: (1) A debtor, Mr Edward made a full settlement of his account by cash and received 10% cash discount on the total of RM5,500. Meanwhile, an outstanding invoice totaled RM1,800 is uncollectable hence to be written off as bad debts. The allowance for doubtful debts is expected to be 5% of outstanding account receivables. 01. (Continued) ( (2) The business was conducted at ground floor of the shop lot. Mrs Zenia was staying at the first floor with her family. The rental for the first floor is 3/5 of the total rental paid. (3) The office equipment is to be depreciated at 10% per annum on straight line method, whereas the motor vehicles are to be depreciated at 20% per annum on reducing balance method. No depreciation is to be provided on premises. The total cash received from Mr Edward in (1) then was deposited into bank account. (5) (6) An advance salary of RM2,500 was given to one of the employees and Mrs Zenia paid in advance the utilities bills amounted to RM550 for July 2020. No records have been made for these transactions in the account. Mrs Zenia transferred from her personal savings account amounted to RM15,000 to business bank account. 1/3 of the carriage expenses represent carriage of goods to customers. Mrs Zenia carried out a physical inventory count on 30 June 2020 and revealed that closing inventory of RM108,900 at cost price and RM136,125 at market price. (7) (8) REQUIRED: (a) (b) (c) Prepare journal entries for the transaction (1) -(6) above. (Narratives are not required). (10 marks) Prepare the Statement of Comprehensive Income for the year ended 30 June 2020 by using vertical format presentation. (16 marks) Prepare the Statement of Financial Position as at 30 June 2020 by using vertical format presentation (12 marks) With reference to Master Cooking Enterprise's events or transactions, identify and briefly explain any FOUR (4) accounting concepts and conventions that affects the financial statements. (12 marks) [Total: 50 marks] (d)
