QUESTION 1

Explain how internal cash controls benefit a company and describe the common types of internal
cash controls.

QUESTION 2

North Paddy Bhd is a new company operated in Northern region of Malaysia. As of 31 October
2015, the North Paddy Bhd’s cash account per its general ledger showed the following balance.
CASH
Date Explanation Ref Debit Credit Balance
. (RM) (RM) (RM)
October 31 Balance 33,822

The bank statement from Global Bank Bhd on that date showed the balance as at 31 October
2015 was RM34,022.50. A comparison of the details on the bank statements with the details in
the cash account revealed the following facts:

1. The statement included a debit memo of RM200 for the printing of additional company
checks.

2. Cash sales of RM4,180.75 on 12 October were deposited in the bank. The cash receipts
journal entry and the deposit slip were incorrectly made for RM4,230.75 The bank credited
North Paddy Bhd for the correct amount.

3. Outstanding checks at 31 October totalled RM1,381.25, and deposits in transit were

RM4,680.75.

4. On 18 October, the company issued check no. 211222 for RM3,425 to Lionel Sdn Bhd, on
account. The check, which was cleared by the bank, was incorrectly journalized and posted
by North Paddy Bhd as RM3,290.

5. A RM10,000 note receivable was collected by the bank for North Paddy Bhd on 31 October
plus RM400 interest. The bank charged a collection fee of RM15. No interest has been
accrued on the note.

6. Included with the cancelled checks was a check issued by Vivo Enterprise to North Paffy
Sdn Bhd for RM3,000 that was incorrectly charged to North Paddy Bhd by the bank.

7. On 31 October, the bank statement showed a NSF (non-sufficient fund) charge of RM3,500
for a check issued by Kassiro Shining Enterprise, a customer to North Paddy Bhd on
account.

REQUIRED:

1
Prepare the bank reconciliation as at 31 October 2015.
QUESTION 3

Keladi Berhad’s statement of comprehensive income for the year ended 31 December 2018
contained the following information:

RM RM
Revenue from fees 840,000
Operating expenses (excluding depreciation) 624,000
Depreciation expense 60,000
Loss on sale of equipment 26,000 (710,000)
Income before income taxes 130,000
Income tax expense (40,000)
Net Income 90,000

Keladi Berhad’s’s statement of financial position contained the following comparative date at 31
December:

2018 2017
RM RM
Accounts receivable 37,000 59,000
Accounts payable (pertaining to operating 46,000 31,000
expenses)
Income taxes payable 4,000 8,500

REQUIRED:

Prepare the operating activities section of the statement of cash flows using the direct method.

2
QUESTION 4

The comparative statements of financial position and statement of comprehensive income for
Stormy Bhd are presented as follow:
Stormy Bhd
Statements of Financial Position
as at 30 September 20X9
20X9 20X8
RM RM
ASSETS
Property, plant and equipment 600,000 500,000
Accumulated depreciation-PPE (80,000) (42,000)
Copyrights 145,600 132,500
Cash and cash equivalents 32,000 25,000
Trade receivables 60,000 72,000
Allowance for doubtful debts (12,000) (10,000)
Inventories 350,000 290,000
Total assets 1,095,600 967,500

EQUITY AND LIABILITIES

Ordinary shares 360,000 320,000
Retained earnings 174,950 109,850
Notes payable 230,000 260,000
Deferred tax liability 25,450 21,000
Trade payables 176,300 100,000
Accrued interest 10,000 11,000
Salary and wages payable 45,200 55,600
Other payables 56,000 50,000
Income tax payable 2,700 2,050
Dividend payable 15,000 38,000
Total equity and liabilities 1,095,600 967,500

3
 Stormy Bhd
Statement of Comprehensive Income
for the year ended 30 September 20X9
RM RM

Sales 1,800,000
Cost of sales 1,150,000
Salary and wages expenses 85,600
Depreciation expenses 53,000
Other expenses 198,000
Gain on sale of machine (20,000)
Interest expense 22,000 (1,488,600)
Profit before tax 311,400
Tax expenses (87,200)
Profit after tax 224,200

Additional information:
1) Machine with book value and accumulated depreciation of RM45,000 and RM15,000
respectively, was sold for RM50,000.
2) A new machine costing RM145,000 was purchased. RM40,000 was paid by issuing share
capital and the remaining balance was paid by cash.
3) Bad debt expenses are included in other expenses.
4) Trade payables were associated to inventory purchases.

REQUIRED
a. Prepare the statement of cash flows for Stormy Bhd for the year ended 30 September
20X9 using direct method.
b. Prepare the operating activities section of the statement of cash flows using the indirect
method.

4
QUESTION 5

The comparative statements of financial position and statement of comprehensive income for
Derdao Bhd are presented as follow:
Derdao Bhd
Statements of Financial Position
as at 30 September 2019
2019 2018
RM RM
ASSETS
Property, plant and equipment 600,000 500,000
Accumulated depreciation-PPE (80,000) (42,000)
Copyrights 145,600 132,500
Cash and cash equivalents 32,000 25,000
Trade receivables 60,000 72,000
Allowance for doubtful debts (12,000) (10,000)
Inventories 350,000 290,000
Total assets 1,095,600 967,500

EQUITY AND LIABILITIES

Ordinary shares 360,000 320,000
Retained earnings 174,950 109,850
Notes payable 230,000 260,000
Trade payables 176,300 100,000
Accrued interest 10,000 11,000
Salary and wages payable 45,200 55,600
Other payables 56,000 50,000
Income tax payable 28,150 23,050
Dividend payable 15,000 38,000
Total equity and liabilities 1,095,600 967,500

5
 Derdao Bhd
Statement of Comprehensive Income
for the year ended 30 September 2019

RM RM

Sales 1,800,000
Cost of sales 1,150,000
Salary and wages expenses 85,600
Depreciation expenses 53,000
Other expenses 198,000
Gain on sale of machine (20,000)
Interest expense 22,000 (1,488,600)
Profit before tax 311,400
Tax expenses (87,200)
Profit after tax 224,200

Additional information:
5) Machine with cost and accumulated depreciation of RM45,000 and RM15,000
respectively, was sold for RM50,000.
6) A new machine costing RM145,000 was purchased. RM40,000 was paid by issuing share
capital and the remaining balance was paid by cash.
7) Bad debt expenses are included in other expenses.
8) Trade payables were associated to inventory purchases.

REQUIRED
c. Prepare the statement of cash flows for Derdao Bhd for the year ended 30 September
2019 using direct method.
d. Prepare the operating activities section of the statement of cash flows using the indirect
method.