Tutorial Topic 6 - FS with Adjustment

a) Show the workings and adjusting entries for the above adjustments.

1. Inventory on 31 December 2019 = RM 26, 200

2. Dt Drawings RM 4, 500

Cr Purchases RM 2, 500

Cr Cash RM 2, 000

3. AFDD = (RM 33, 550 - RM 2, 000) x 2

= RM 631 (ending balance) – SOFP

4. Doubtful debts expenses = RM 631 - RM 2, 500 + RM 2, 000

= RM 131 - SOPL (Increase in AFDD)

5.

i) Depreciation Building = RM 419, 700 x 10%

= RM 41, 970

Dt Depreciation Building RM 41, 970

Cr Acc depreciation building RM 41, 970

ii) Depreciation Furniture = RM 165, 000 x 10%

= RM 16, 500

Dt Depreciation furniture RM 16, 500

Cr Acc depreciation furniture RM 16, 500

iii) Depreciation Motor vehicle = (RM 90, 000 - RM 29, 000) x 20%

= RM 12, 200

Dt Depreciation motor vehicle RM 12, 200

Cr Acc depreciation motor vehicle RM 12, 200

 6. Total interest on loan = RM 472, 500 x 8%

= RM 37, 800

Accrued interest on loan = RM 37, 800 - RM 3, 250

= RM 34, 550

Dt Interest on loan RM 34, 550

Cr Accrued interest on loan RM 34, 550

7. Dt administration expenses RM 1, 500

Cr Accrued administration expenses RM 1, 500

Dt Prepaid rental expenses RM 1, 100

Cr Rental expenses RM 1, 100

8. Dt Accrued interest on fixed deposit RM 725

Cr Interest on fixed deposit RM 725

 b) Prepare a Statement of Profit or Loss for the year ended 31

December 2019.

Tuah Enterprise

Statement of Profit or Loss for the year ended 31 December 2019

RM RM RM
Sales 458,900
Less: Return inwards (6,000) (6,000)
Discount allowed (8,250)
Net sales 444,650

Less: Cost of goods sold

Opening inventory 22,000
Purchases (312500-2500) 310,000
Less: Return outwards (5,000)
Discount received (6,200)
Net purchases 298,800
Add: Carriage inwards 4.800
Duty on purchases 2,000

Cost of goods purchased 305,600

Cost of goods available for sales 327,600
Less: Closing inventory (26,200) 301,400
Gross profit 143,250

Add: Other Income

Interest on fixed deposit (1775+ 725) 2,500

Less: Operating expenses

Travelling expenses 23,400
Water and electricity expenses 27,000
Rental (21300 - 1100) 20,200
Telephone expense 2,100
Interest on loan (3250 + 34550) 37,800
Administration expenses (9000+1500) 10,500
Insurance expenses 21,250
Salesman's commission 7,300
Salary 18,500
Repair and maintenance 10,000
Carriage outwards 5,700
Doubtful debts 131
Depreciation building 41,970
Depreciation furniture 16,500
Depreciation motor vehicle 12,200 (254,551)
Net Loss (108,801)
c) Prepare a Statement of Financial Position as at 31
December 2019.

Tuah Enterprise

Statement of Financial Position as at 31 December 2019

RM RM RM
Accumulated Carrying
Cost Depreciation amount
Non-current Assets
Building 419,700 (83,970) 335,730
Furniture 165,000 (69,000) 96,000
Motor vehicle 90,000 (41,2000) 48,800
480,530
Intangible Assets
Patent 52,800

Fixed deposit 93,350

Current Assets
Closing inventory 26,200
Account receivable (33550-2000) 31,550
Less: Allowance for doutful debts (631) 30,919
Cash at bank 157,500
Cash in hand (22500-2000) 20,500
Prepaid rental expenses 1,100
Accrued interest on fixed deposit 725 236,944
863,624

Financed by: Owner's Equity

Capital beginning 437,800
Less: Net loss (108,801)
Drawing (6500+4500) (11,000)
Capital ending 317,999

Non-current Liabilities
Loan from bank 472,500

Current Liabilities
Account payable 37,075
Accrued interest on loan 34,550
Accrued administration expenses 1,500 73,125
863,624