The following Trial Balance was extracted from the books of Barakah Book Store as at 31 August 2018.

The following adjustments need to be considered:

1. Inventories as at 31 August 2018 was valued at RM5,200.
2. The owner had taken RM600 cash for repairing of her house.
3. The interest on loan from Bank Rakyat had not been taken into account.
4. Rent received RM400 is for September 2018.
5. RM600 of the insurance was prepaid.
6. RM250 of the electricity, water and telephone has not been paid for the current year.
7. Additional bad debts of RM220 are to be written off.
8. The provision for doubtful debts is to be adjusted to 5% of outstanding account receivables.
9. Depreciation is to be provided as follows:
   • Office equipment - 25% straight line method.
   • Delivery van - 20% reducing balance method.
   • Fixtures and fittings have 5 years of useful life after which the scrap value is RM500.

Required:

1. Prepare Statement of Profit and Loss for the year ended 31 August 2018.
2. Prepare a Statement of Financial Position as at 31 August 2018.

(WOULD BE APPRECIATED IF YOU CAN EXPLAIN AND SHOW THE CALCULATION FOR ALL THE ADJUSTMENTS)

Debit (RM) Credit (RM) Purchases Account Receivables 38,220 13,720 63,120 59,175 7,265 Sales Capital Account Payables Drawings Office Equipment Delivery van Fixtures & fittings Advertising Cash Maintenance & Petrol Salaries & Wages Bad debts Carriage inwards Carriage outwards Electricity, Water & Telephone Duties on Purchases Return inwards Return outwards Inventories 1 September 2017 Provision for Depreciation; 1 Sept. 2017: Delivery Van Fixtures and Fittings Office Equipment 3,800 24,500 18,300 7,200 8,500 8,260 2,320 8,010 200 420 500 1,220 1,830 220 225 6,830 2,745 2,160 4,900 1,480 16,000 1,400 Commission received 12% loan from Bank Rakyat (taken on 1 Jan 2018.) Rent Insurance Bank Discounts Provision for doubtful debts; 1 Sept 2017 2,400 2,000 10,540 430 350 600 159,420 159,420