BKAF1023 INTRODUCTION TO FINANCIAL ACCOUNTING

ANSWER SCHEME

QUESTION 1 (a)

      Debit Credit
2/1 Cash    
150,000
  Equipment    
90,000
    Capital  
240,000

3/1 Prepaid expenses-    

insurance 24,000
    Cash  
24,000

5/1 Supplies    
4,000
    Cash  
4,000

8/1 Prepaid expenses-rental    

6,000
    Cash  
6,000

15/1 Van    
10,000
    Acct. Payable  
10,000

18/1 Cash    
50,000
  Acct. Receivable    
20,000
    Revenue  
70,000

19/1 Acct. Payable    

6,000
    Cash  
6,000

20/1 Cash    
10,000

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 BKAF1023 INTRODUCTION TO FINANCIAL ACCOUNTING

    Unearned Revenue  
10,000

20/1 Utilities expense    

2,000
    Accrued expenses-  
utilities 2,000

25/1 Salary expense    

12,000
    Accrued expenses-salary  
12,000

26/1 Cash    
12,000
    Acct. Receivable  
12,000

29/1 Unearned Revenue    

10,000
    Revenue  
10,000

Adjusting Journal Entry

31/1 Depreciation expenses-    

equipment 900
  Accumulated  
Depreciation-equipment 900
90,000 x .12/12 900

31/1 Depreciation expenses-    

van 100
  Accumulated  
Depreciation-van 100
10,000 x .12/12 100

31/1 Supplies expenses    

3,000
  Supplies  
3,000

31/1 Rental expenses    

2,000
  Prepaid expenses-rental  
2,000
24000/12 2000

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31/1 Insurance expenses    

500
  Prepaid expenses-  
insurance 500
6000/12 500

QUESTION 1 (b)

Cash
Date Description DR CR Balance
2    
150,000 150,000
3    
24,000 126,000
5    
4,000 122,000
8    
6,000 116,000
19    
50,000 166,000
20    
6,000 160,000
20    
10,000 170,000
     
12,000 182,000
Equipment        
2    
90,000 90,000
         
Van        
18    
10,000 10,000
         
Prepaid expenses-rental        
3    
24,000 24,000
31    
2,000 22,000
         
Prepaid expenses-        
insurance
8    
6,000 6,000
31    

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500 5,500
         
Acct. Receivable        
19    
20,000 20,000
26    
12,000 8,000
         
Supplies        
5    
4,000 4,000
31    
3,000 1,000
         
Utilities expenses        
20   2000   2000
         
Rental expenses        
31    
2,000 2,000
Insurance expenses        
31    
500 500
Salary expenses        
25    
12,000 12,000
Acct. Payable        
20    
10,000 10,000
20    
6,000 4,000
         
Accrued expenses-utilities        
20    
2,000 2,000
         
Accrued expenses-salary        
25    
12,000 12,000
         
Unearned Revenue        
20    
10,000 10,000
29    
10,000 0
         
Revenue        
19    

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70,000 70,000
29    
10,000 80,000
         
Depreciation expenses-        
equipment
31    
900 900
Depreciation expenses-        
van
31    
100 100
         
Accumulated    
Depreciation-equipment 900 900
         
Accumulated    
Depreciation-van 100 100
         
Capital        
2    
240,000 240,000

QUESTION 1 (c)

ABC Cleaning Services

Enterprise
Trial Balance as at 31 Jan 2017
Debit Credit
RM RM
Equipment 90,000
Van 10,000
Cash 182,000
Supplies 1,000
Acct.Receivable 8,000
Prepaid expenses-rental 22,000
Prepaid expenses-insurance 5,500
Utilities expenses 2,000
Rental expenses 2,000
Insurance expenses 500
Salary expenses 12,000
Supplies expenses 3,000
Depreciation expenses-equipment 900
Depreciation expenses-van 100
Capital 240,000
Acct.Payable 4,000

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 BKAF1023 INTRODUCTION TO FINANCIAL ACCOUNTING

Accrued expenses-utilities 2,000

Accrued expenses-salary 12,000
Accumulated Depreciation-equipment 900
Accumulated Depreciation-van 100
Unearned revenue -
Revenue 80,000
339,000 339,000

QUESTION 1 (d)

ABC Cleaning Services Enterprise

Statement of Comprehensive Income for the month ended 31 January
2017
RM RM

Revenue 80,000
Less
: Expenses

Rental expenses 2,000

Utilities expenses 2,000

Insurance expenses 500

Salary expenses 12,000

Depreciation expenses-equipment 900

Depreciation expenses-van 100

Supplies expenses 3,000 20,500

Profit for the month 59,500

QUESTION 1 (e)

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ABC Cleaning Services Enterprise

Statement of Financial Position as at 31 January 2017
ASSETS RM RM
Non-Current Assets

Equipment 90,000
Less
: Accumulated Depreciation (900) 89,100

Van 10,000
Less
: Accumulated Depreciation (100) 9,900

99,000
Current Assets

Cash 182,000

Supplies 1,000

Acct. Receivable 8,000

Prepaid expenses-rental 22,000

Prepaid expenses-insurance 5,500 218,500

TOTAL ASSETS 317,500

LIABILITIES

Acct. Payable 4,000

Accrued expenses-utilities 2,000

Accrued expenses-salary 12,000

Unearned revenue - 18,000

EQUITIE
S

Capital 240,000

Profit for the month 59,500 299,500

TOTAL LIABILITIES and
EQUITIES 317,500

QUESTION 2 (a)
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 BKAF1023 INTRODUCTION TO FINANCIAL ACCOUNTING

Date (Oct) Account Debit Credit

2 Merchandise Inventory 10000
Cash 5000
A/Payable (Ella) 5000

3 Cash 4850
Sales 4850

Cost of Sales 3500

Merchandise Inventory 3500

5 Merchandise Inventory 8500

A/Payable (Ahmed) 8500

9 A/Payable (Ella) 5000

Cash 4750
Merchandise Inventory 250

Discount = 5000 x 5% = 250

13 A/Receivable (Utara) 2250
Sales 2250

Cost of Sales 880

Merchandise Inventory 880

14 A/Payable (Ahmed) 8,500

Merchandise Inventory 168
Cash 8332

Discount = 8400 x 2% = 168

20 Cash 2160
Sales Discount 90
A/Payable (Utara) 2250

Discount = 2250 x 4% = 90

23 A/Receivable (Horey) 6000

Sales 6000

Cost of Sales 2850

Merchandise Inventory 2850

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30 Sales Return and Allowances 1800

A/Receivable (Horey) 1800

Merchandise Inventory 650

Cost of Sales 650

QUESTION 2 (b)

Sales (4850+2250+6000) 13,100

Less: Sales discount 90
Sales returned and allowances 1,800 (1,890)
Net Sales 11,210
Less: Cost of Sales (3500+880+2850-650) (6,580)
Gross Profit 4,630
Less: Operating Expenses (3,500)
Net Profit 1,130

QUESTION 2 (B)

Advantages of a partnership

(a) Ability to share knowledge, expertise, and experience among co-partners in the business.
(b) Easy to form the partnership firm and lower cost of formation as compared to the other
types of business organizations.
(c) Enables firm to get additional sources of investment capital from each partner since more
than one partner is within the partnership firm.
(d) Possible tax advantages where a partnership has the same tax status as a sole
proprietorship and is, therefore, not subject to taxes on its income.
(e) Easy to manage and decisions can be made with less bureaucracy since the owners of the
partnership firm are usually its managers

QUESTION 2 (C)

Disadvantages of a corporation

(a) Governmental Regulation

(b) Corporate Taxation

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QUESTION 3 (a)

Gigih Manufacturing Bhd

Statement of Cost of Goods Manufactured
for the year ended 31 December 2016
RM
Beginning work-in-process 65,000
Direct material:
Beginning raw material 30,000
Raw material purchased 550,000
Raw materials available for used 580,000
Ending raw material (35,000)
Raw material used 545,000
Direct labour 280,000
Factory overhead:
Indirect labour 120,000
Depreciation – machine 15,000
Utilities expenses 18,000
Depreciation – factory 30,000
Insurance expenses 10,000
Supplies 5,000
Other expenses 3,000
Total overhead 201,000
Total manufacturing cost 1,026,000
Total cost 1,091,000
Ending work-in-process (54,000)
Cost of Goods Manufactured 1,037,000

QUESTION 3 (b)

Sales 2,100,000
(-) COGS: Beginning Inventory, Finished Goods 180,000
Cost of Goods Manufactured 1,037,000
Cost of Goods available to sell 1,217,000
Ending Inventory, Finished Goods (130,000) (1,087,000)
Gross Profit 1,013,000
(-) Operating Expenses:
Sales expenses 70,000
Administration expenses 45,000
Utilities expenses 27,000
Insurance expenses 10,000
Supplies expenses 20,000
Other expenses 27,000 (199,000)
Profit before tax 814,000
(-) taxation (25,000)
Net Profit 789,000

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QUESTION 4 (a)

Nur Sdn Bhd

Bank Reconciliation
31 March 2017
(RM)
Balance per bank, 31 March 727,298
Add: Deposit in transit 137,915
Bank error in charging check as RM10,850instead 270
of RM10,580 865,483

Less: Outstanding cheques No 113 85,465

No 125 125,939
No 527 128,290
(339,694)
Adjusted Bank Balance, 31 March 525,789

Balance per books, 31 March 555,649

Add: Note receivable collected by bank 39,950
A/R collected by bank 29,452
625,051

Less: Bank service charges (115+389+309) 813

Error in recording check A/P 180

Check returned because of insufficient funds RM98,269

(99,262)
Adjusted Book Balance, 31 March 525,789

QUESTION 4 (B)

Objective of Internal control are as follows:

 Safeguard its assets.
 Process information accurately.
 Ensure compliance with laws and regulations.

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QUESTION 5 (a)

Sabri Company
Comparative Statement of Comprehensive Income
For the year ended December 31, 2016

2016 2015 Increase Increase

(Decrease) (Decrease)
Amount Percentage
Sales 1,750,500 1,655,500 95,000 5.7%
Sales returns and allowance 102,300 101,250 1,050 1.0%
Net sales 1,648,200 1,554,250 93,950 6.0%
Cost of goods sold 898,450 840,450 58,000 6.9%
Gross profit 749,750 713,800 35,950 5.0%
Selling expenses 94,150 91,250 2,900 3.2%
Administrative expanses 101,250 105,450 -4,200 -4.0%
Total operating expanses 195,400 196,700 -1,300 -0.7%
Operating profit 554,350 517,100 37,250 7.2%
Other income 105,120 98,000 7,120 7.3%
Other expense (interest) 67,250 55,000 12,250 22.3%
Profit before income tax 592,220 560,100 32,120 5.7%
Income tax expense 164,675 164,675 0 0.0%
Net profit 427,545 395,425 32,120 8.1%

QUESTION 5 (b)

Ratios Formula Calculation Answer

1- Quick Ratio Quick Assets 135,480+284,900+365,7 786,160 0.67
Current Liability 80 1,169,400
1,169,400
2- Account Net Sale 1,648,200 1,648,200 12.31
Receivable Average Account (135,480+132,350)/2 133,915
Turnover Receivable
3- Number Of Average Inventory 160,000+152,500)/2 156,250 63.46
Days’ Sales In Average Daily Cost Of 898,450/365 2,462
Inventory Goods Sold
4- Ratio Of Total Liabilities 450,650+1,169,400 1,620,050 0.27
Liabilities To Total Equity 5,947,760 5,947,760
Equity
5- Ratio Of Net Net Sales 1,648,200 1,648,200 0.35 or
Sales To Average Total Assets (4,767,210+4,632,250)/2 4,699,730 35%
Assets
6- Rate Earned Net Profit 427,545 427,545 0.07 or
On Equity Average Total Equity (5,947,760+5,713,930)/2 5,830,845 7.33%

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QUESTION 5 (c)

o Horizontal analysis is the percentage analysis of increases and decreases in related

items in comparative financial statements.

o Vertical analysis is a percentage analysis used to show the relationship of each

component to the total within a single financial statement.

o In a common-sized statement, all items are expressed as percentages with no

Malaysian Ringgit amounts shown OR Common-sized statements are useful for
comparing the current period with prior periods, individual businesses with one
another, or one business with industry averages.

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