Student Name: Ong Urn Wee

Kaplan ID: CT0322078

Question 1

Mayflower Company
INCOME STATEMENT FOR THE YEAR ENDED 30 September 2022
  $ $
Sales   6,252,000
Less: Returns inwards/Sales Returns   (36,000)
Net sales   6,216,000
Less: Cost of goods sold
Opening Stock 481,200  
Purchases 3,732,000  
Less Returns outwards / Purchases returns (24,000)  
Carriage inwards 48,000  
  4,237,200  
Less: Closing inventory (300,000) (3,937,200)
Gross Profit   2,278,800
     
Less: Expenses
Transport expenses 48,000  
Salary 297,600  
Rental 252,000  
Electrical Expenses 130,800  
Staff welfare expenses 120,000  
General Expenses 144,000  
Depreciation on non-current assets 144,000  
Carriage outwards 84,000  
Total Expenses   (1,220,400)
Profit before interest and tax   1,058,400
Tax   -
Profit after tax   1,058,400
     
     
     
Mayflower Company
STATEMENT OF FINANCIAL POSITION AS AT 30 September 2022
ASSETS $ $
Non-current assets
Machinery 1,440,000  
Less: Accumulated Depreciation (468,000) 972,000
  972,000
CURRENT ASSEST
Accounts receivables   192,000
Cash at bank   1,482,000

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Closing Inventory   300,000
  1,974,000
Total Assets 2,946,000
EQUITY AND LIABILITIES
Capital and Reserves
Ordinary share capital   1,608,000
Retained earnings (previous plus current)   1,058,400
    2,666,400
Current liabilities
Accounts payables   303,600
Electrical expenses (accural)   24,000
  327,600
Total equity and liabilities   2,994,000
 

 
 

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 Question 2

Information
- Financial year-end is 30 September 2022

- 1st Nov 2021 renovated the office for $358,000

o 5 years useful life
o Residual value of $10,000

- 1 October 2021 purchased heavy machinery for $239,000

o Total capacity ro produce 87,600 units
o Residual valve of $20,000

Answer a)
12 months depreciation of office renovation = ($358,000 - $10,000)/5= $69,600
1st Nov 2021 to 30th Sept 2022= 11 months
One month depreciation= $69,600/ 12 = $5,800
Annual depreciation= $5,800 X 11 = $63,800

The annual depreciation expense for the financial year ended 30 Sept 2022 is $63,800.

Tuas Company
STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2022
ASSETS $ $
Non-current assets
Office renovation 358,000  
Less: Accumulated Depreciation (63,800) 294,200

The net book value of the office renovation for the year ended 30 September 2022 is $294,200.

Answer b)
Depreciation per unit = ($239,000 - $20,000)/ 87,600 = $2.50
Annual depreciation= 4,500 * $2.50 = $11,250.00

The annual depreciation expense for the financial year ended 30 Sept 2022 is $11,250.00

Tuas Company
STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2022
ASSETS $ $
Non-current assets
Office renovation 239,000  
227,750.00
(11,250)
Less: Accumulated Depreciation

The net book value of the office renovation for the year ended 30 September 2022 is $227,750.

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Answer C)
Depreciation Journal Entry
Date Account Name Debit Credit
Depreciation expense
$100,000.00
account
30 September 2022
Accumulated depreciation
$100,000.00
account

Answer d)
The first main cause of depreciation is due to wear and tear when used. As the asset gets older by
the year, it will deteriorate in condition and therefore declines in value. For example, a brand new
car is worth less value when compared to a brand new car of the same model.

The second main cause of depreciation is obsolescence, which means being out of date. As
technology improves, the better quality of the same item will be in the market for the same price,
making the old machine less valuable and therefore, we need to apply depreciation for the asset.

Answer e)
The matching principle is the accrual accounting method that deals with an outstanding expense
that has not been invoiced or paid, but services have been delivered. By performing the matching
principle, one can get an accurate measurement of a ccompany’sperformance.

The time period assumption in accounting allows a company to produce financial information at
different informal time periods, for example, every quarterly or even monthly; the purpose of the
increased frequency in producing financial information can allow business owners or managers to
use the reports to make decisions.

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 Question 3
Answer a)
Trial Balance
As at 30 September 2022
  Debit ($) Credit ($)  
Cash at bank 2,326,800  
Opening Inventory 228,000  
Insurance 86,400  
Accumulated Depreciation 576,000  
Transport expenses 127,200  
Carriage inwards 268,800  
Sales 5,040,000  
Capital 2,400,000  
Shop Rental 576,000  
Bank Overdraft 12,000  
Discount received 4,800  
Equipment at cost 1,200,000  
Salaries 1,099,200  
Accounts Receivables 192,000  
Purchases 1,488,000  
General Expense 511,200  
Accounts Payables 120,000  
Carriage outwards 49,200  
Total $ 8,152,800 $ 8,152,800  

Answer b)
An ordinary share is issued to the owners of the company when the company is first registered.
Amount of shares each owner owns will determine the percentage of his/ her ownership in the
company. If there are 100,00 shares in the company and each person owns 50,000 share, it means
that each persons have the same amount of shares and voting rights. There are other types of
shares, for example preference shares where owners of the shares do not have voting rights, but are
entitled to a fixed dividend.

Answer c)
Allowance for receivables for FY2022= $4,320,000 X 10% = $432,000

$
Trade receivable 4,320,000
Less irrecoverable debt written off (120 000)
Nett 4,200,000

Allowance for receivables for FY2022= $4,320,000 X 10% = $432,000

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 Allowance for receivable
Current Year $ 432,000
Previous Year $ 340,000
Increase in allowance $ 92,000

Journal Entry
Item Debit Credit
Irrecoverable debt expenses 120,000
Trade receivables 120,000
Journal Entry
Item Debit Credit
Irrecoverable debt expenses 92,000
Allowance for receivable 92,000

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 Question 4

Answer a)
Date Particular Debit ($) Credit ($)
Bank 1,600,000  
1/9/2022
Capital   1,600,000
Machinery 140,000  
7/9/2022
Accounts payable   140,000
11/9/202 Inventory 100,000  
2 Accounts payable   100,000
13/9/202 Rental 30,000  
2 Bank   30,000
17/9/202 Cash 104,000  
2 Sales   104,000
21/9/202 Inventory 122,000  
2 Cash   122,000
23/9/202 Accounts payable 140,000  
2 Bank   140,000
24/9/202 Accounts receivable 210,000  
2 Sales   210,000
27/9/202 Stationary expenses 30  
2 Cash   30
28/9/202 Drawings 2,500  
2 Cash/ Bank   2,500
29/9/202 Cash/ Bank 210,000  
2 Accounts receivable   210,000
30/9/202 Salary 70,000  
2 Bank   70,000

Answer b)
Revenue or
Description
Capital
Payment for salary expenses Revenue
Payment of loan interest Revenue
Purchase a lorry for the company operation. Capital
The company issued new shares to finance its business expansion. Capital

Answer c)
Information
- Phoenix Company financial year end is 30 September 2022
- Oasis Company engaged Phoenix Company for one-year consultancy services and paid
$42,000 starting from 1 February 2022.

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One month consultancy fees = $42,000 / 12 = $3,500
Number of months from 1 Feb 2022 to 30 Sep 2022 = 8 months
Phoenix company consultancy fees (8 months) = $3,500 X 8 = $28,000

Phoenix Company consultancy income for the year ended 30 September 2022 is $28,000

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