Course Code : BAAB1014

Course Title : BUSINESS ACCOUNTING

Semester : SEPTEMBER 2023

Student Name : Muhammad Syahmi Bin Anua

Matric Number : mc230521983

(a) Income statement

Aroma trading

Income Statement

For the Year Ending December 31, 2020

RMNotes
Net Sales 327,000(1)
Less: Cost of goods sold (270,800)(2)
Gross Profit 56,200
Less: Operating expenses
Carriage outwards (1,500)
Discount allowed (2,200)
Utilities expenses (5,400)(3)
Insurance expenses (7,300)(4)
Bad debts expenses (4,400)(5)
Selling expenses (8,800)
Depreciation –office equipment (5,625)(6)
Depreciation –Motor Vehicles (20,000)(7)
Total operating expenses (55,225)
Operating Profit 975
Rental Income 14,000
Less: Interest expense (2,482)(8)
Income before taxes 12,493

Notes

(1) Net sales

Sales 330,000

Less: Return Inwards 3,000

Net sales 327,000

(2) Cost of goods sold

Purchases 240,000

Add: Carriage inwards 3,400

Less:

Discount received (4,600)

Return outwards (2,000)

Net Purchases 236,800

Add: Inventory Jan1 45,000

Less: Inventory Dec 31 (38,000)

Add: wages and salaries 27,000

Cost of goods sold 270,800

(3) Utilities Expenses

As per trial balance 3,800

Add Accrued expenses 1,600

Total 5,400

(4) Insurance expenses

As per trial balance 7,900

Less Prepaid (600)

Net 7,300

(5) Bad debt expenses

Allowance for doubtful debts Jan 1 500

Less: bad debts as per trial balance (750)

Bad debts written off (3,000)

Balance (3,250)

Balance required

5% *(26,000 – 3,000) 1,150

Therefore bad debts expense = 1,150 + 3,250

= 4,400

(6) Depreciation office equipment

Office equipment at cost 30,000

Less accumulated depreciation Jan 1 (7,500)

Net Book Value 22,500

Depreciation for the year 25% * 22,500 = 5,625

(7) Depreciation Motor vehicles

20% * 100,000 = 20,000

(8) Interest expenses

As per trail balance 1,250

Accrued for 6 months 8% * 30,800 / 2 = 1,232

Total 2,482

(b) Statement of financial position

AromaTrading

Statement of Financial Position

As on December 31, 2020

Assets RM RM
Current Assets
Cash 5,650
Bank 11,500
Accounts receivables 23,000
Less: Allowance for doubtful debts (1,150)
Accounts receivables (Net) 21,850
Inventory 38,000
Prepaid Insurance 600
Total Current Assets 77,600
Noncurrent Assets
Office Equipment at cost 30,000
Less Accumulated depreciation (13,125)
Office Equipment (Net) 16,875
Motor Vehicles at cost 100,000
Less Accumulated depreciation (60,000)
Motor Vehicles (Net) 40,000
Total Noncurrent Assets 56,875
Total Assets 134,475
Liabilities and Equity
Liabilities
Current Liabilities
Accounts Payable 22,250
 Accrued Utilities Expenses 1,600
Accrued Interest 1,232
Total Current Liabilities 25,082
Noncurrent Liabilities
Bank Loan 30,800
Total Noncurrent Liabilities 30,800
Total Liabilities 55,882
Owner’s Equity
Capital 78,593
Total Liabilities and owner’s equity 134,475

Notes

1 Cash

As per trial balance 5,950

Less withdrawn by the owner 300

Cash balance on Dec 31 5,650

2 Capital

Balance Jan1 70,000

Add Profit for the year as per income statement 2,493

Total 72,493

Less: Drawings as per trial balance (3,600)

Cash withdrawn for family (300)

Capital Dec 31 68,593

 QUESTION 2

2022 Effects Account to be debited Account to be credited Book prime of

entry
Jan 1 Increase Bank Bank RM60 000 General Journal
Increase Capital Capital RM60 000
Jan 2 Increase Inventory Inventory RM8 000 General Journal
Increase Accounts Payable Account Payable RM8 000
Jan 10 Increase Office Equipment Office Equipment RM10 000 Cash Book Journal
Decrease Cash Bank RM 10 000
Jan 11 Increase Accounts Receivable Accounts Receivables RM 5000 Sales Journal
Increase Sales Sales RM5 000
Jan 12 Increase Cash Bank RM5 000 Cash Book Journal
Decrease Accounts Receivables Accounts Receivables RM5 000
Jan 14 Decrease Accounts Payable Accounts Payable RM8 000 Cash Book Journal
Decrease Cash Bank RM8 000
Jan 25 Increase Utilities Expense Utilities Expense RM 400 Cash Book Journal
Decrease Cash Bank RM400
Jan 27 Increase Cash Bank RM30 000 Cash Book Journal
Increase Bank Loan Bank RM 30 000
Jan 30 Increase Cash Bank RM 5 OOO Cash Book Jpurnal
Increase Dividend Divedend Revenue RM5 000

QUESTION 3

a) Number of participants trained in 2022:

Charge of participant = RM230
Variable costs = RM 130
Contribution per participant = RM 100
Estimated Fixed Costs = RM 55000
Profit = Total Contribution - Fixed Costs
So, (Participants * 100 - 55000) = -5000
Participants = (-5000+55000)/100 = 500

Break-even point for 2022 :

b) Break-even point = Fixed Costs/Contribution per participant
=55000/100
= 550 participants

Number of participants to achieve the target :

c) Participants to be trained to achieve the Profit target =(Fixed Costs +

Target Profit)/Contribution per participant
= (55000+5000)/100 = 600 participants

Charges per participant to achieve the target:

d) Fees charged to participant =
(Fixed Costs + Target Profit)/(Fees charge - Variable costs)= 500 Participants
(55000 + 5000)/(Fees charge - 130) = 500
Fees charge - 130 = (55000+5000)/500 = 120
Fees charge = 120+130 = RM 250 per Participant

Proof: (55000+5000)/(250-130) = 500 participant

QUESTION 4

a) To identify which products the company should concentrate on, we can use
the contribution margin per unit, which is calculated as the selling price minus
the marginal cost. Additionally, we need to consider the availability of Glossy
Melamine and market constraints.

calculate the contribution margin per unit for each product:

Modern:220−84= RM136
Antique:340−104=RM 236
Trendy:440−144=RM 296
Smart:280−124=RM156

Now, calculate the Glossy Melamine used by each product:

Modern:5,000 units×20 ml=100,000 ml

Antique:4,000 units×20 ml=80,000 ml
Trendy:3,000 units×28 ml=84,000 ml
Smart:3,000 units×30 ml=90,000 ml

The Total Glossy Melamine used is = 100 000 + 80 000 + 84 000 + 90 000=
354 000

Since only 300,000 ml of Glossy Melamine is available, the company is

constrained by the availability of this raw material.

Therefore, the company should concentrate on the products that use Glossy
Melamine more efficiently.
 



(b) To calculate the number of units to be produced and sold for each product,
we need to consider both the Glossy Melamine constraint and the market
constraints:



Modern:Min(5,000 units,Glossy Melamine constraint)

=Min(5,000 units,300,000 ml/20 ml per unit)

=Min(5,000 units,15,000 units)

=5,000 units



Antique:Min(4,000 units,Glossy Melamine constraint)

=Min(4,000 units,300,000 ml/20 ml per unit)

=Min(4,000 units,15,000 units)

=4,000 units



Trendy:Min(3,000 units,Glossy Melamine constraint)

=Min(3,000 units,300,000 ml/28 ml per unit)

≈Min(3,000 units,10,714 units)

=3,000 units(rounded down)



Smart:Min(3,000 units,Glossy Melamine constraint)

=Min(3,000 units,300,000 ml/30 ml per unit)

=Min(3,000 units,10,000 units)


Therefore, the company should produce and sell 5,000 units of Modern, 4,000 units
of Antique, 3,000 units of Trendy, and 3,000 units of Smart to maximize profit.
(c) Now, prepare the marginal cost statement showing the profit for Modern
Home Sdn Bhd for the year:

Revenue:(5,000×220)+(4,000×340)+(3,000×440)+(3,000×280)
=1,100,000+1,360,000+1,320,000+840,000
=4,620,000 RM

Less: Marginal Cost5,000×84)+(4,000×104)+(3,000×144)+(3,000×124)

=420,000+416,000+432,000+372,000
=1,640,000RM

Contribution Margin:4,620,000−1,640,000
=2,980,000 RM150,000

Less: Fixed Costs Profit: RM2,980,000−150,000

Therefore, the profit for Modern Home Sdn Bhd for the year is RM2,830,000