UNIVERSITI TUNKU ABDUL RAHMAN ACADEMIC YEAR 2012/2013, APRIL EXAMINATION UBAF1013 FINANCIAL ACCOUNTING FRAMEWORK I WEDNESDAY, 24 APRIL 2013 TIME: 2.00 PM — 5.00 PM (3 HOURS) BACHELOR OF BUSINESS ADMINISTRATION (HONS) BANKING AND FINANCE BACHELOR OF COMMERCE (HONS) ACCOUNTING BACHELOR OF FINANCE (HONS) Instructions to Candidates: This paper comprises TWO (2) sections. Section A: [Total: 40 marks} This section consists of ONE (1) COMPULSORY question. The question carries FORTY (40) marks. Section B: {Total: 60 marks] — Answer TWO out of THREE questions This section consists of THREE (3) questions. Answer ANY TWO (2) questions. Each question carries THIRTY (30) marks. Marks are awarded for all relevant workings, ‘This question paper consists of 4 questions on 7 printed pages.Section A Answer ONE (1) COMPULSORY question. Qi. 2 UBAF1013 FINANCIAL ACCOUNTING FRAM!I RK I [Total: 40 marks] ‘The Silver Honey, an internationally known sole-proprietorship in Malaysia, dealing with fine silver product, extracted the following trial balance as at 31 August 2012. 2 DEBIT(RM) | CREDIT(RM)_| | Capital ae os es 915 600) - Year 10% p.a, Bank Loan 1,000,000 | Provision for Doubtful Debt Allowance 600 [Return 10,000 5,500 | Carriage Inward 1,000 | Provision for depreciation: . __= Equipment ee __ 10,000 = Motor vehicle 15,000 Stationary 1,500 Trade Debtors and Trade Payables 675,500 100,000 Insurance 15,000 Drawings 5,000 Travelling Expenses 4,000 Telephone 3,000 _| Wages 20,000 | Interest on Loan 2,800 | 2,500 Cash at bank 1,176,000. = Utilities 35,500 Sales and Purchases 1,009,400 2,004,500 Inventory at 1 September 2011 Premises Rental _ ale | Bank Charges a Motor Vehicle 370,000 Equipment ae 534,000 Administration expenses | 5,000 _| 4,053,700 4,053,700 Additional Information: 1 ‘A physical inventory count on 31 August 2012 shown the closing inventories of RM25,000 at cost. The market value of the closing inventory at 31 August 2012 was RM30,000. This question paper consists of 4 questions on 7 printed pages.3 UBAF1013 FINANCIAL ACCOUNTING FRAMEWORK I Section A Ql. (Continued) 2. Property, Plant and Equipment of the firm are depreciated on the Reducing Balance Method with the following annual rates:- Equipment - 25% Motor Vehicle - 20% Depreciation is calculated in the year of acquisition while no depreciation is calculated in the year of disposal. 3. A debt of RM21,000 is to be written off as irrecoverable. 4, Interest on bank loan for half year was not yet paid. 5. The Provision for Doubtful Debt Allowance was to be adjusted to 6% of debtors. 6. A credit note amounting RMS51,000 was received from a supplier. This transaction had been omitted from the books. 7. Utilities estimated at RM5,000 was expected to be paid for August 2012 but the bill were not yet received. 8. The owner took RM1,000 cash from the firm to celebrate Merdeka Day with his family and friends. 9. Bank interest of RM3,000 was estimated to be eared on the minimum bank balances of the firm but this has not yet been received or recorded by the firm, Required: (@) Prepare adjusting journal entries for the additional information from no. 2 to 9 above. (10 marks) (b) Prepare Income Statement for the year ended 31 August 2012. (15 marks) (©) Prepare Balance Sheet as at 31 August 2012. (12 marks) NOTE: Used vertical format presentation (@) Define closing entries. (3 marks) {Total: 40 marks] This question paper consists of 4 questions on 7 printed pages.4 UBAF1013 FINANCIAL ACCOUNTING FRAMEWORK 1 Section B 60 marks] Answer ANY TWO (2) out of THREE (3) questions Qi @. Ikhwan Bhd., manufacturer of lozenges, purchased a new pieces of equipment which was priced at RM400,000 from an equipment manufacturer. Transportation costs involved amounted to RMI,000. In addition, the insurance against damage for the equipment while being transported to the business premises of Ikhwan Bhd. was RM400 and installation costs amounted to RM8,600. The accountant decided to use a Reducing Balance Method for calculating depreciation and given a rate of 25% per annum. The equipment was purchased, transported and installed on the same day, i.e. on 2 January 2005. Ikhwan Bhd. paid all the relevant costs and expenses. with cheques. The company's financial year ends on the 31 December each year. Required: (2) Calculate the installation cost of equipment and the annual depreciation expenses for the year 2005, 2006, 2007, 2008 and 2009. (10 marks) (b) Prepare the journal entries to record the acquisition of the asset in 2005 and adjusting entries for depreciation at the end of each financial year, 2005 to 2009(with a narration), (12 marks) (© List FOUR (4) causes of depreciation. (4 marks) (@ Define the term 'book value’. (2 marks) (©) Define a depreciable asset (2 marks) [Total: 30 marks] (a) Zania Bhd. had a debit balance of RM786,467 in the Bank Account in the General Ledger on 30 September 2012. The Bank Statement received for the month showed a credit balance of RM711,088. On comparing the Cash Book with the Bank Statement, the following were discovered: 1. Cheque No. 886900 for RM42,786 for purchase of Computer which had been cashed on 26 September 2012 had not been recorded in the Cash Book. 2. Deposits made on 30 September 2012 amounting to RM52,639 had not been credited in the Bank Statement. This question paper consists of 4 questions on 7 printed pages.5 UBAF1013 FINANCIAL ACCOUNTING FRAMEWORK I Section B (b) a) (Continued) 3. The following cheques were not yet presented to the bank: Cheque No. 135900 for RM24,654 and Cheque No. 186900 for RM7,828. 4, Ulali Industries, a customer, made a direct deposit into firm's bank on 29 September 2012 for RM15,439. Dividends on investments were paid direct to the bank on 15 September 2012 for RM14,625. 6. Direct payments made to creditors on behalf of the firm through the firm's bank for RM42,500 were not yet recorded in the Cash Book. Required: (Update the Bank Account. (8 marks) (ii) Prepare Bank Reconciliation Statement as at 30 September 2012. (7 marks) Miftah has a sundry shop business registered under the name of Miftah Enterprise. The following is a summarized version of the bad debts, provision for doubtful debt and the debtor’s accounts of his business since its started in 2008. (The accounting period of the business is similar to the normal calendar year). Year [Debtors at the end | Bad Debtors Provision for Doubtful of the year already written off | Debts to be created during the year given as percentage of outstanding debtors at the end of year. RM RM % 2008 400,000 3,000 1 2009 395,000 3,500 1 2010 420,000 6,000 1 2011 | 500,000 1,000 1 2012 380,000 500 1 Required: Prepare the Balance Sheet (extract) for the year 2008, 2009, 2010, 2011 and 2012. (15 marks) [Total: 30 marks] This question paper consists of 4 questions on 7 printed pages.UBAF1013 FINANCIAL A Section B inued) Q3. (a) The following are some of the account balances extracted from the Woolan Trading at 30 April 2012: Debit RM Rent revenue Interest revenue Electricity expense 2,000 Insurance expense 3,000 Commission revenue Telephone expense 480 Additional information for 30 April 2012: a, Telephone expense owing was RM30 b. Commissions revenue received in advance amounted to RM200 c. RM600 of the insurance was not yet used up 4. Electricity expense owing amounted to RM100 €. Interest of RM400 was earned but not yet received. £ RMS500 of the rent revenue was not yet eared. Required: ledger of Credit RM 6,500 3,800 4,000 Prepare the double entries (T-format) for the following accounts to record the above adjustments () Telephone Expense )) Commissions Revenue Insurance Expense (iv) Electricity Expense (v) __ Interest Revenue (vi) Rent Revenue This question paper consists of 4 questions on 7 printed pages. G marks) G marks) G marks) (3 marks) (4 marks) (4 marks)7 UBAF1013 FINANCIAL ACCOUNTING FRAMEWORK 1 ion B ) (Continued) ‘The new bookkeeper of Paradox Enterprises prepared the following trial balance which was found to be out of balance. Paradox Enterprises Trial Balance as at 31 January 2012 Debit Credit RM RM Investments 70,000 Bank Loan 80,000 Motor Van Repairs 3,000 Stationary Expense 1,000 Equipment 38,000 Land and Building 350,000 Motor Van 54,000 Insurance Expense 12,000 Advertising Expense 8,000 Salaries Expense 90,000 Inventory 24,000 Purchases 340,000 Sales 650,000 Drawings 6,000 Capital 250,000 Creditors 40,000 Debtors 25,000 Bank Overdraft 5,000 Cash in hand 4000 1,016,000 1,034,000 An examination of the ledger made: yunts showed that the following had been 1. Creditors were understated by RMS500 when a purchase of RM4,000 was made, although the record in the purchases account was correctly made. 2. Motor Van Repairs of RM1,000 was incorrectly recorded in the Motor ‘Van account. 3. Cash drawings were RM6,500 but the drawings account was under- recorded by RMS00. Required: Prepare a proper corrected trial balance as at 31 January 2012. (10 marks) {Total: 30 marks] ‘This question paper consists of 4 questions on 7 printed pages.