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AC/SEP 2011/FAR250/260/ FAC250/391

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

FINANCIAL ACCOUNTING 4/FINANCIAL ACCOUNTING/COMPANY ACCOUNTS FAR250/260/FAC250/391 SEPTEMBER 2011 3 HOURS

INSTRUCTIONS TO CANDIDATES 1. 2. 3. This question paper consists of five (5) questions. Answer ALL questions in the Answer Booklet. Start each answer on a new page. Do not bring any material into the examination room unless permission is given by the invigilator. Please check to make sure that this examination pack consists of: i) ii) the Question Paper an Answer Booklet - provided by the Faculty

4.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 8 printed pages
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AC/SEP 2011/FAR250/260/ FAC250/391

QUESTION 1 Ace Bhd was registered with an authorized capital of 2,000,000,000 ordinary shares of RM2.00 each and 600,000,000 8% preference shares of RM1 each. The following balances were extracted from the accounts of Ace Bhd as at 30 June 2011. RM Ordinary shares of RM2.00 each 8% Preference shares of RM1.00 each 6% Debentures Share premium Retained earnings as at 1 July 2010 Preliminary expenses Freehold property at cost Machinery at cost Motor vehicles at cost Trade receivables and payables Provision for doubtful debts Accumulated depreciation as at 1 July 2010: -Freehold property -Machinery -Motor vehicles Quoted investments Unquoted investments Sales Cost of sales Inventory as at 30 June 2011 Cash at bank Tax paid Interim preference dividend Debenture interest Advertising and salesmen's commission Directors' remuneration Auditors' fees Income from investments Quoted Unquoted Administrative expenses RM 1,000,000,000 500,000,000 60,000,000 100,000,000

178,000,000
6,000,000 900,000,000 150,000,000 247,000,000 170,000,000

153,000,000 8,500,000 105,000,000 40,650,000 95,311,000

250,000,000 145,000,000
850,000,000 417,500,000 85,000,000 458,621,000 34,740,000 14,400,000 1,800,000 45,220,000 45,000,000 23,600,000 18,000,000 5,220,000 119,800,000 3,113,681,000 3,113,681,000

Additional information: 1. Damaged inventories amounting to RM240,000 were not provided for in the accounts. The sales included a credit sales of RM2,000,000 worth of goods which was delivered on 25 July 2011. These goods were included in the closing inventory. All preliminary expenses are to be written off against share premium.
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2.

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AC/SEP 2011 /FAR250/260/ FAC250/391

4.

Freehold property consists of land RM550,000,000 and building RM350,000,000. The depreciation expense for the following assets is to be calculated as follows: Building: 10% per annum using the straight line method. Machinery and motor vehicles: 10% and 15% respectively using the reducing balance method. The depreciation on motor vehicle is to be treated as selling activity.

5.

Provisions are to be made for: Half year's debenture interest Director's remuneration of RM20,000,000 Doubtful debts of 10% is to be made after writing off an additional RM100,000asbaddebt.

6.

During the year, the directors declared the following: Final dividend of RM0.10 per share for ordinary shares Final dividend of preference shares Transfer RM180,000 to general reserve

7.

A bonus issue in the ratio of one for every fifty (50) ordinary shares held by the existing shareholders was issued out of share premium. No record has been made for this issue. These shares are not entitled for dividends declared at the end of year. Taxation on profit for the year was RM39,890,000. The company has entered into a contract to acquire some plant through finance lease. The amount involved is RM2 million but to date no payment has been made.

8. 9.

Required: Prepare the following statements in a form suitable for publication and in compliance with the Companies Act 1965 (as amended) and approved accounting standards: a) b) c) e) Statement of Comprehensive Income for the year ended 30 June 2011; (9 marks) Statement of Changes in Equity for the year ended 30 June 2011. (6 marks) Statement of Financial Position as at 30 June 2011; (9 marks) The following notes to the accounts: i) Net profit before tax ii) Property, Plant and Equipment iii) Share capital iv) Earnings Per Share v) Capital commitment (6 marks) (Total: 30 marks)
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AC/SEP 2011/FAR250/260/ FAC250/391

QUESTION 2 Sinar Bhd was incorporated with an authorized capital of 14 million ordinary shares of RM0.50 each and 1.5 million 7% Preference shares of RM2 each. Below is the Statement of Financial Position extract of Sinar Bhd as at 31 December 2009. Issued and paid-up capital Ordinary shares of RM0.50 each 7% Preference shares of RM2 each Reserves Share premium Retained earnings Asset Bank

RM6,000,000 RM2,000,000 RM8,000,000 RM 480,000 RM 750,000

RM 400,000

During 2010, the directors of Sinar Bhd decided the following: 1. In order to support the expansion of the business, the company decided to issue all the remaining ordinary shares at a discount of 20 sen each. The company also issued 500,000 units of preference shares at a premium of 10%. The shares issued were payable in full on application. On 31 July 2010, the applications received for the issue of preference shares were undersubscribed by half but the applications received for ordinary shares were oversubscribed by 2,000,000 units. The discounts on issuance of ordinary shares were written off against share premium. On 1 October 2010, the company issued RM500.000 6% Debentures at 105. Interest on debentures was accrued at the end of the year.

2.

3.

Required: a) Prepare all the relevant journal entries (without narrations) for the above transactions. (10 marks) Prepare the extract of the Statement of Financial Position of Sinar Bhd as at 31 December 2010. (4 marks) Describe the differences between bonus issue and rights issue. (4 marks) (Total: 18 marks)

b)

c)

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AC/SEP 2011/FAR250/260/ FAC250/391

QUESTION 3 The following information is related to Melaka Raya Centre on 31 December 2010 and 2009. 31/12/2010 (RM) Freehold land Plant and machinery (NBV) Long term investment Short term investment Goodwill Inventory Prepaid administration expense Prepaid advertisement expense Trade receivable Cash in hand 152,000 408,000 45,000 15,000 32,000 8,000 4,000 120,000 5,000 789,000 Ordinary shares 3% Redeemable preference shares Capital redemption reserve Share premium Retained profits Asset revaluation reserve Tax payable Dividends payable Trade payable Accrued selling and distribution expense Accrued administration expense Bank overdraft 400,000 80,000 40,000 105,000 56,000 20,000 4,000 8,000 53,000 5,000 2,000 16,000 789,000 31/12/2009 (RM) 60,000 440,000 25,000 20,000 40,000 20,000 1,500 4,000 77,000 15,000 702,500 360,000 120,000 40,000 80,000 6,000 12,000 72,000 2,500 10,000 702,500

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AC/SEP 2011 /FAR250/260/ FAC250/391

Additional information: 1. Redeemable preference shares were redeemed at 10% premium. The premium on redemption was written off to the share premium account. These preference shares were redeemed out of profit. Depreciation on plant and machinery charged in the statement of comprehensive income was RM16,000. Land was revalued and the surplus on revaluation of RM20.000 has been credited to the asset revaluation reserve. There was no disposal of land in 2010. Last year's dividend payable was paid this year. Tax expense charged in the income statement was RM5.600. Plant and machinery was disposed of at a profit of RM2,000. There was no purchase of plant and machinery in 2010. Short term investment qualifies as cash and cash equivalent.

2.

3.

4. 5. 6.

7.

Required: Prepare a Statement of Cash Flows for the year ended 31 December 2010 for Melaka Raya Centre using the indirect method and in compliance with FRS 107 Statement of Cash Flow. (Total: 24 marks) QUESTION 4 Below are the balances available for Mutiara Hati Bhd as at 30 April 2010: RM'000 Issued and paid up capital 10,000,000 Ordinary shares of RM2.00 each Less: Treasury shares (500,000 shares) Reserves Share premium Retained earnings General reserves Non-current liabilities 15,000,000 8% Redeemable preference shares of RM1.00 each 10% Redeemable debentures Assets Non current assets (net) Investments Bank
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20,000 1,250

6,000 12,500 3,000

15,000 10,000

12,000 20,500 32,750

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AC/SEP 2011/FAR250/260/ FAC250/391

Additional information: During the year ended 30 April 2011, the board of directors had successfully executed a plan for capital and loan repayment for the company: a. To redeem half of the 8% redeemable preference shares at a premium of 15%. b. To finance the redemption, the company is to: i) ii) Issue 3,000,000 10% preference shares of RM 2 at a premium of 25 sen each, which were fully subscribed and paid, for. Dispose of 45% of the investments at a profit of RM5,000,000.

c. To repurchase 500,000 ordinary shares to be kept as treasury shares at the same price as what they have paid last year. d. To redeem 20% of the debentures at a discount of 20%. The debenture discount is to be written off immediately. Required: a. Show the relevant ledger accounts to record the above transactions. (16 marks) b. Define the following: i) ii) Deferred shares Authorised capital (2 marks) (Total: 18 marks)

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AC/SEP 2011/FAR250/260/ FAC250/391

QUESTION 5 Given below are four (4) situations which are independent of each other. The financial year end for all the situations is 31 December 2010 and the financial statements are expected to be approved by the board of directors of the company on 31 March 2011. Where relevant, state the nature, the amount to be accounted for, and the accounting treatment for the situations. (i) Islah Holding has signed a contract with Jaya Maju Construction company to construct a shop building. The contract price was estimated to be RM30,000,000. Contract cost of construction was RM24,000,000. By the end of the year, the cost incurred was RM 15,600,000 on the work performed and the client paid RM16,000,000 up to financial year end. Show your workings. (4 marks) The company received an order from its regular customer, Sinar Maju Bhd to manufacture a special porcelain on 15 December 2010. The customer paid RM5.000 as deposit and the balance of RM45.000 will be settled in 12 months installment. This porcelain will be ready and delivered in May 2011. (2 marks) In February 2011, the directors of the company decided to declare a final preference dividend for the year 2010. (2 marks) On 31 January 2011, the warehouse of Jejarum Bhd was destroyed by fire with an estimated loss of RM100,000 on inventory. (2 marks) (Total: 10 marks)

(ii)

(iii)

(iv)

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