Assume all companies listed in the questions below are clients of MFP Cloud Sdn Bhd.

Question 1

Phoenix Co. Pte Ltd received $400.00 from Unicorn Enterprise as payment for Invoice no PC-0215.
However, the total invoice amount of PC-0215 is $1,850.00. You received a note from Phoenix Co.
director stating that he has agreed to contra the balance amount to Unicorn Enterprise invoices no.
UE-0115 of $300.00 of and UE-0123 of $1,150.00.

Required:

List what are the accounting entries required for this transaction.

Question 2

Lenny Company purchase a car, SBC888U, under hire-purchase during the month of August 2016.
The accounts clerk has been making for the amount of $736.00 each month to the hire-purchase
creditor (August – December 2016). You are finalising the accounts for Lenny Company. You were
given a copy of the hire-purchase agreement with the following details:-

Purchase price of car $78,000.00

Trade in value of SBB410T $16,500.00

Additional Deposit $10,000.00

Principal amount under hire purchase : $51,500.00

Hire-purchase interest: $10,300

Total to be paid to HP creditor $61,800

Repayment amount $736.00 for 83 installments

Repayment amount $712 for 84th installment

Additional information:-

1) The deposit of $10,000 was paid on 2 August 2016 to the car dealer via a company cheque
and was recorded by the accounts clerk as “fixed assets – motor vehicle”.
2) The monthly payment of $736.00 was recorded by the accounts clerk by debiting the “Hire-
Purchase Creditor” account.
3) Motor vehicle SBB410T that was traded in was the director’s own personal vehicle.
4) The company’s financial year end is in December.
5) The company’s policy for HP interest is to recognise it on a straight line basis over the period
under hire-purchase

Required:

List down the adjustment accounting entries to be passed as at 31 December 2016.

Question 3

The accounts clerk of Pals Sdn Bhd (Pals) gave you a call for advice. She has already prepared the
salaries for Pals staff for the month and ask you how to record the payment in the accounts.

Required:

What will you advise the accounts clerk? What other considerations are required before giving your
advice?

Question 4

Stroop Waffles Pte Ltd (Stroop Waffles) has recently appointed Zaleha A. Rahman Associates Sdn
Bhd to draw up their accounts for the period from 1 January 2016 to 31 December 2016. The
accounts up to 31 December 2015 was drawn up by another accountant from XYZ Sdn Bhd.

The director of Stroop Waffles asked what are the documents required to be given to you in order to
draw up the accounts for 2016.

Required:

Advise the director.

Question 5

The director of White Sands Trading (White Sands) called you for advice on accounting policy
matters. They have the following fixed assets and properties and wanted to provide for depreciation
in the accounts:-

a) Van which is on hire-purchase for 7 years

b) Building and Property which land is on lease for 60 years
c) Computers
d) Office tables and chairs

Required:

Advise the director of White Sands and also let him know what your basis on the number of years for
the assets to be depreciated over.