PAY FONG MIDDLE SCHOOL

Term Test (2) 2021

Book-keeping
Class: C2 He /Ping /Zhen

Prepared by: Koh Her Loke Date: 6th September 2021

Proofread by: Yu Mei Chuen Time: 10am – 11am

Royal Bhd was a limited company with an authorised capital of 300,000 ordinary shares of RM 1
each, and 50,000 5% preferred shares of RM 2 each. The following information was extracted from
the books of the company for the year ended 31 December 2020:

Debit (RM) Credit (RM)

Issued Shares Capital ~ Ordinary Shares 250,000
~ 5% Preferred Shares 100,000
Land and Building, on cost 300,000
Motor Vehicles, on cost 50,000
Furniture and Fixtures, on cost 30,000
Accumulated Depreciation
~ Motor Vehicle 25,000
~ Furniture and Fittings 5,700
Investment (quoted) at cost
120,000
(Market Value RM 170,000)
Accounts Receivable and Accounts Payable 25,380 18,750
15% Loan Notes 50,000
Bank 3,150
Allowance for Doubtful Debts 500
Purchases and Revenue 95,830 109,000
Inventory, 1 January 2020 27,370
Carriage inwards 5,000
Discounts 7,000 6,000
Bad Debts 200
Insurance 3,000
Legal Expenses 5,000
Office Salaries 8,000
Interest on Loan Notes 3,750
Carriage outwards 2,500
Audit Fees 4,000
Preliminary Expenses 2,000
General Reserve 40,000
Income from Investment 10,000
Interim Dividends Paid ~ Ordinary Shares 12,500
~ 5% Preferred Shares 5,000
Retained Profits, 1 January 2020 38,430
Share Premium 50,000
706,530 706,530
The following details are related to the company for the financial year:
1. Inventory on 31 December 2020 was RM 32,770.
2. An amount of RM 380 included in the accounts receivable is to be written off as bad debt.
The allowance for doubtful debts is to be provided at 4% of remaining accounts receivable.
3. Insurance was paid for 15 months up to 31 March 2021.
4. Income from investments not yet received was amounted to RM 2,000.
5. The Directors are entitled to RM 10,000 per annum remuneration.
6. To charge depreciation as follows:
~ Motor Vehicles: 5% per annum using straight line method;
~ Furniture and Fittings: 10% per annum using reducing balance method.
7. The board of directors recommended the following:
~ General Reserve to be increased by RM 5,000;
~ An asset replacement reserve amounting to RM 10,000 to be created.

You are required to prepare the following financial statements:

a. Income Statement for the year ended 31 December 2020;
b. Statement Of Changes In Equity for the year ended 31 December 2020;
c. Mr Ong hold 1,000 Ordinary Share and 2,000 Preference Share in Royal Bhd, how much
dividend will he receive for the year if the directors proposed to pay final dividend of RM
0.40 per share making a total of RM 0.45 on ordinary shares for the year, and the
preference share dividends were also paid in full?

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