CHAPTER 5 (PREPAID/ACCRUAL/DEPRECIATION/BAD DEBT/BAD DEBT

RECOVERED)

Question 1
(ACCRUED
REVENUE)

Jamal Enterprise rented out part of its building on 1st September 2021 at a rental
of RM400 per month and is receivable at the end of each month. The accounting periods ends
31 December each year. Rental received by cheque are as follows:

Date Amount Month

(RM)
30-Sep-21 400 Sep-21
31-Oct-21 400 Oct-21
30-Nov- 400 Nov-21
21
6-Jan-22 400 Dec-21

Required:
Record the transactions in the journal and post to the appropriate ledgers.
Prepare extract of Income Statement and Balance Sheet as at 31 December 2021.

Step 1: Record cash received

September

30 Sept Dr Bank 400 Sept 21

Cr Rent received 400

31 Oct Dr Bank 400 Oct 21

Cr Rent received 400

30 Nov Dr Bank 400 Nov 21

Cr Rent received 400

Step 2: Record accrued revenue

31 Dec Dr accrued rent 400 Dec 21 will be paid on Jan 22

Cr Rent received 400

Step 3: Transfer to I/S

31 Dec Dr Rent received 1600 Sept + Oct + Nov + Dec

Cr Income statement 1600

Question 2 (Accrued Expenses)

ABC trading rents a stall on 1 October 2021 at the rate of RM100 per month payable at the
end of each month. The accounting year ends 31 December 2021 each year. Payment made
as follows (payment made by cheque)

Date Amount (RM) Month

31 Oct 2021 100 Oct -21
30 Nov 100 Nov- 21
2021
1 Jan 2022 100 Dec - 21
Step 1

31 Oct Dr Rent expenses 100 Oct 21

Cr Bank 100

30 Nov Dr Rent expenses 100 Nov 21

Cr Bank 100

Step 2

31 Dec Dr Rent expenses 100 Dec 21 paid in Jan 22

Cr Accrued rent 100

Step 3

31 Dec Dr IS 300 Oct + Nov + Dec

Cr Rent expenses 300

Question 3 (Prepaid Revenue)

Abu rents out its office on 1 October 2021 at a rental of RM200 per month and will be
receive by cheque at the end of each month. The accounting period ends 31 December each
year.

Date Amount (RM) Month

31 Oct 2021 200 Oct -21
30 Nov 200 Nov- 21
2021
31 Dec 400 Dec – 21 &
2021 Jan 2022
Step 1
31 Oct Dr Bank 200
Cr Rent received 200
30 Nov Dr Bank 200
Cr Rent received 200
31 Dec Dr Bank 400
Cr rent received 400
Step 2
Revenue receive in advance
31 Dec Dr rent received 200 Jan 22
Cr prepaid rent 200

Question4
(PREPAID
EXPENSES)
KBA Marketing paid insurance policy RM50 per month (by cheque) for its business. Its
accounting period ends
31 December.

Date Amount Month

(RM)
1-Oct-13 200 October
2020 -
January
2021

Required:
Record the transactions in the journal and post to the appropriate ledgers.
Prepare extract of Income Statement and Balance Sheet as at 31 December 2021.

Step 1

01 Oct Dr Insurance Expenses 200 Oct + Nov + Dec + Jan (50X4) =200

Cr Bank 200

Step 2

31 Dec 202 Dr Prepaid Expenses 50 Jan 21

Cr Insurance Expenses 50

Step 3

Transfer insurance expenses to I/S

31 Dec 202 Dr IS 150 Oct 20, Nov 20, Dec 20

Cr Insurance expenses 150

Question 5 (Depreciation)Straight line method and Reducing Balance Method

A. Cost of Machine: RM 120,000

Salvage Value: RM 12,000

Useful Life: 5 Years

B. Cost of Machine: RM 117,900

Salvage Value: RM 12,000

Useful Life: 5 Years

C. Cost of Machine: RM 90,000

Salvage Value: RM 5,000

Useful Life: 5 Years

D. Cost of Machine: RM 70,000

Salvage Value: RM 5,000

Useful Life: 5 Years

Question 6 (Bad Debts and Bad Debt Recovered)

A. In the books of a sole trader on 1 December 2021, it was found that Ali and Ahmad
owed RM300 and RM500 respectively. They failed to settle the debts. The sole trader
decided to write off the whole amount as bad debt on 31 December 2021.
B. A debtor, Ahmad, whose account had been written off as bad debt paid RM500 by
cheque to settle the amount owing by him on 1 October 2021.