LECTURE 4 PART 2: FINANCIAL STATEMENTS WITH ADJUSTMENTS

QUESTION 1

Mariam is in business as a retailer. The following balances were extracted from the books of
Mariam Enterprise as at 30 September 2019.
RM
Capital at 1 October 2018 190,000
Drawing 21,000
Land and buildings (at cost) 150,000
Fixtures and Fittings (at cost) 28,000
Computer equipment (at cost) 40,000
Accumulated depreciation:
Fixtures and Fittings 19,000
Computer equipment 12,000
8% loan 50,000
Loan interest paid 2,000
Bank 10,000
Cash 4,070
Account receivables 60,000
Account payables 31,000
Sales 365,000
Purchases 135,000
Goods returned by customers 8,900
Return outwards 4,250
Inventory at 1 October 2018 33,500
Delivery expenses 18,630
Computer repairs expenses 19,150
General running expenses 31,600
Salaries and wages 86,700
Marketing costs 14,000
Discount allowed 22,400
Discount received 13,700

Additional information:
1. Inventory as at 30 September 2019 was valued at RM36,550.
2. An invoice for a credit purchase of goods RM6,500 had been misplaced and no entries had
been recorded in the books.
3. The purchase of fixtures and fittings, RM4,000 had been included in the general running
expenses.

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4. At 30 September 2019, computer repair expenses RM1,700 were accrued and salaries and
wages were prepaid RM5,200.
5. The 8% bank loan was received on 1 January 2019.
6. Depreciation is to be charged at the of the year as follows:
(i) Fixtures and fittings at the rate of 15% per annum using the straight-line method.
(ii) Computer equipment at the rate of 25% per annum using the reducing balance
method.

Required:
a) Prepare the statement of profit or loss for the year ended 30 September 2019.
b) Prepare the statement of financial position as at 30 September 2019.

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QUESTION 2

Clearwater Sdn. Bhd. is a merchandising company which has business operations in Putrajaya.
The following balances have been extracted from the books as at 31 December 2018.
Debit Credit
(RM) (RM)
Land 900,000
Building 240,000
Machinery 60,000
Accumulated Depreciation:
Building 72,000
Machinery 11,400
7.5% Loan from Maybank, 10 Years 350,000
Bank overdraft 45,000
Cash 36,000
Account receivable 122,800
Inventories, 1 Jan 117,200
Account payable 65,000
Dividend 60,000
Share capital 800,000
Supplies 110,000
Carriage outwards 40,000
Carriage inwards 9,600
Return inwards 2,000
Purchases and sales 440,000 980,000
Discount allowed 45,000
Salaries expenses 150,000
Bad debts 10,000
Prepaid insurance 36,000
Interest expenses 13,125
Telephone and internet charges 5,000
Rental and maintenance 36,000
General expenses 55,800
Retained earnings, 1 Jan 165,125
2,488,5
25 2,488,525

Additional information:

1. Closing inventories as at 31 December 2018 was valued at RM50,000.

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2. A count on supplies on 31 December 2018 revealed RM60,000 worth still on hand.

3. Half of the interest on loan has not been paid for the year.
4. Commission received RM15,000 has not been included and no entries had been recorded in
the books.
5. Depreciation was to be provided:
Building 2% on cost
Machinery 10% on reducing balance
6. Telephone and internet charges outstanding amounted to RM1,300.
7. The prepaid insurance is for a 12-month policy purchased by cash on 1 March 2018. The
policy is effective from 1 March 2018.

Required:

a) Prepare the statement of profit or loss for the year ended 31 December 2018
b) Prepare the retained earnings statement for the year ended 31 December 2018.
c) Prepare the statement of financial position as at 31 December 2018.