Question
UBAF1013 FINANCIAL ACCOUNTING FRAMEWORK 1 (Continued) Q3. The Statement of Comprehensive Income for Universal Trading (UT) for the year ended 31 December 2019 showed a
UBAF1013 FINANCIAL ACCOUNTING FRAMEWORK 1 (Continued) Q3. The Statement of Comprehensive Income for Universal Trading (UT) for the year ended 31 December 2019 showed a net profit of RM49,360. However, the cash book on 31 December 2019 showed a balance at bank column to be RM6,440. Your attention is however drawn to the following: (1) Cheques from customers totalling RM4,980 which were recorded in the cash book on 20 December 2019 were actually not credited by the bank until 2 January 2020. (2) Cheques issued on 13 December 2019 totalling RM7,420 in favour of suppliers were actually not paid by the bank until after the end of the year. (3) On 22 November 2019, the bank paid an amount of RM3,600 with respect to a standing order from UT for rent of business premises for the three months to 31 January 2020 but unfortunately, no entry for this payment had been made in the cash book. Additionally, no provision of this outstanding rent had been made in the Statement of Comprehensive Income for the period. 4 (4) On 31 December 2019, a customer had paid RM2,340 into UT bank account through a standing order to his bankers in full settlement of a debit balance of RM2,400 in UT sale ledger, but no entry had been made in the books. (5) (6) On 30 December 2019, a cheque for RM480 was received from a customer in settlement of sales invoice for the same amount. The cheques were lodged into UT bank account. Both sale of goods and the cheque were entered in UT's books. However, on 31 December 2019, the customer returned the goods and also instructed her bankers not to pay the cheque (this instruction was carried out the same day) but no entries in respect of these latter developments have been made in UT's books. The cost of these goods amounting to RM320 were not actually included in the closing inventory. A cheque for RM840 from an insurance company in settlement of claim for fire damage to inventory had been paid into the bank and credited by the bank on 21 December 2019, but an estimated amount of RM800 had been entered in UT's Statement of Comprehensive Income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started