1. The following is a balance sheet prepared by Donovan on 31 December 2001.

Trial balance as at 31 Dec 2001 Premise 68000 Cash 250 Bank 8600 Capital 1 Jan 2001 55000 Bad debts 340 Provision for doubtful debts 240 Purchases and sales 32400 52600 Discount 270 320 Return 410 Electricity and water deposits 300 Water and electricity 2160 Drawing 220 Loan (1 Oct 2001) 10000 Debtors and creditors 2730 8420 inventory 1 Jan 2001 3600 Vehicle 10200 Office equipment 6200 Loan interest 140 Repair expenses 210 Insurance 480 Commission 380 Rental 7200 Stationery 110 Provision for vehicle depreciation 1020 Provision for office equipment 620 depreciation 136210 136210

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Stock at 31 December 2001 worth RM 6808 and RM 6080 the cost price at market value. A check value RM 430 has been received from a debtor. These checks payable to a creditor to settle a debt of RM480. This is forgetting recorded. Vehicles and office equipment are depreciated 10% per annum reducing balance method. Adjust the provision for doubtful debts to 5% on debtors. Interest on loans is 8% per annum. Annual insurance paid from March 1, 2001.

You are required to provide: a) The income statement for the year ended 31 December 20x1. b) Balance sheet at 31 December 2001 in the form of statements.

2. Kenny Company has prepared the following trial balance at March 31, 2007. Trial Balance at 31 Mar 2007 Capital 1 April 2006 22255 Provision for doubtful debts 160 Debtors and creditors 4320 2680 Drawing 1260 Insurance 520 Commission 210 Vehicles 8000 Purchase and sales 22800 43600 Discount 326 440 Return 520 650 Petty expenses 220 Provision for equipment depreciation 660 Petty cash 110 Bad debts 85 Inventory on 1 April 2006 3680 Freight inward 148 Equipment 6600 Rental 550 Wages and salary 1680 Import duty 136 Provision for vehicle depreciation 800 Bank 21600 72005 72005

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Stock on March 31, 2007 amounted to RM4520. Vehicles must be depreciated at a rate of 10% per annum reducing balance method. An insurance premium paid is for one year beginning July 1, 2006. Provision for doubtful debts to be reduced to RM136. Kenny received RM320 cash from a debtor to settle debts of RM345. The money received was used to pay for private insurance premiums. Only half of the rent received.

You are required to provide: a) Income statement for the year ended 31 Mar 2007. b) Balance sheet as at 31 Mar 2007.