ACCOUNTING 1 WORKBOOK SECOND EDITION
Table of Contents 1 2 3 5 6 7 8 9 10 11 Editor’s Notes Basic Accounting Concepts Accounting Cycle Introduction to Accounting Adjustment at The End of Accounting Period Accounting for Cash Accounting for Receivables Accounting for Inventories Accounting for Non-Current Assets Accounting for Liabilities Accounting for Equity Updates
Editor’s Note Acknowledgement Table of contents Kolej Matrikulasi Melaka Kolej Matrikulasi Negeri Sembilan Kolej Matrikulasi Pulau Pinang Kolej Matrikulasi Labuan Kolej Matrikulasi Perlis Kolej Matrikulasi Johor Kolej Matrikulasi Perak Kolej Matrikulasi Kedah Kolej Matrikulasi Pahang Kolej Matrikulasi Selangor Kolej Matrikulasi Kelantan
1INTRODUCTION TO ACCOUNTING Table of contents
1 QUESTION 1 Identify the characteristics of sole proprietorship, partnership and company in terms of capital and liability of members. QUESTION 2 State one (1) example of an internal user and one (1) example of an external user of accounting information. State their purpose for using the information. QUESTION 3 Differentiate between accounting and bookkeeping. QUESTION 4 Explain two functions of any two (2) of Professional Accounting Bodies in Malaysia. EXERCISE ANSWER Table of contents 1.1
2 BASIC ACCOUNTING CONCEPTS Table of contents
2 Identify the related accounting concept which has not been complied with in the following cases: QUESTION 1 1. Kota Raya Sdn Bhd (KRSB) bought a hectare of land worth RM 270,000 in 2017. In 2022, the current market value of the land is RM 540,000. When preparing the financial statements of KRSB, accountants reported the land at the current market value ,RM540,000. 2. A business owner reports a computer as an asset in his business’ financial statements. The computer is used by his children at home, not for business’ purpose. 3. Mr. Wadi, an owner of a furniture company bought wood on credit on 1 October 2022 and he only recorded the purchase when payment was made on 30 October 2022. 4. Perniagaan Ampang (PA) had been using the straight-line depreciation method for recording depreciation expense and accumulated depreciation. In 2021, the accountant changed the straight-line method to the reducing balance method. Identify the related accounting concepts for each of the following cases. QUESTION 2 EXERCISE ANSWER Table of contents 1. Perniagaan Bonda (PB) has been using the straight-line depreciation method for recording depreciation expense and accumulated depreciation. In 2022, PB’s accountant changed the straight line method to the reducing balance method without disclosing the change in the notes to accounts. 2. Perniagaan Seribu Cahaya bought a piece of land at a price of RM 200,000.The current market value of the land was RM 400,000. The business is not sure the amount that should be recorded. 3. Mr.Ragaman believes that the inventory valuation method, Last-in, First-out (LIFO) can be changed to a First-in, First-out (FIFO) at any time. 4. Suci Sdn. Bhd. did not recognise depreciation expenses for furniture and office equipment. 5. Vehicle maintenance expenses of Gemilang Enterprise in July 2022 was RM 7,000. This amount included RM800 car maintenance expenses of the business owner. 2.1
2 QUESTION 3 The following transactions related to Perniagaan Sweetie (PS) for the month of September 2022. Date Transactions Sept 3 Puan Manis, the owner of PS, brought in additional capital in the form of cash RM 25,000. 8 Received RM 1,000 cash from the debtor. 10 Purchased equipment RM 5,000 in cash. 13 Paid RM 2,000 to suppliers. 15 Provided services on account to customers RM 3,000. 20 Paid RM 520 cash for electricity and water bills. 23 Provided a service of RM 6,000 in cash. 25 Paid RM850 wages to workers. 27 Puan Manis withdrew RM100 cash to pay for her house electricity bill. 30 Received payment for services rendered on 15 September. Prepare a tabular analysis of the effect of the above transactions on the accounting equation using the following format: Required: Date Assets (RM) (+/-) = Liabilities (RM) (+/-) + Owner’s Equity (RM) (+/-) Cash Accounts Receivable Equipment Accounts Payable Capital Balance b/f 10,000 1,000 10,000 2,000 19,000 EXERCISE Table of contents The first row in the given column is the balances for each accounts 2.2 ANSWER
2 QUESTION 4 The following transactions related to Mr Hadif’s business for the month of November 2022:. Date Transactions 1 Mr. Hadif added RM 30,000 cash as a capital in his business. 2 Purchased office equipment on credit of RM 5,000. 3 Paid RM 1,000 cash for office rent. 4 Paid employee salaries of RM 2,000 in cash. 5 Mr. Hadif took RM 500 cash for his own use. 6 Paid RM 350 for advertising expenses. Required: Prepare a tabular analysis of the above transactions using the following format: Date Assets (+/-) = Liabilities (+/-) + Owner’s Equity (+/-) Total EXERCISE Table of contents 2.3 ANSWER
3 ACCOUNTING CYCLE Table of contents
3 QUESTION 1 Date Transactions Mar 2 Started a business with cash of RM30,000 and furniture amounting to RM7,000. 4 Received a bank loan of RM20,000 to increase business capital. 7 Purchased of merchandise worth RM12,000 on credit from Musytari Sdn. Bhd. with the terms 3/10, n/30. 12 Sold items of RM500 on credit to Perniagaan Sinar. 16 Settled half of Musytari Sdn Bhd’s debt with a cheque. 23 Paid utilities expense RM40 by cash Required : Prepare: i. Purchase Journal ii. Sales Journal iii. Cash Receipts Journal iv. Cash Payments Journal v. General Journal. The followings are the business transactions of Perniagaan Zuhal for the month of March 2022 EXERCISE ANSWER Table of contents 3.1
3 Date Transactions March 2 Perniagaan ISMI’s owner invested furniture, RM20,000 and cash RM10,000 into the business 4 Sold mechandise worth RM 4,000 to Pikir Sdn. Bhd. (PSB), Invoice no.007, terms 2/10, n/30. 11 Purchased merchandise worth RM200 by cheque. 14 Received cheque for the 4th March sales. 23 Sold merchandise for cash RM1,000. 25 Purchased merchandise from Perniagaan Jejak Waja for cash, RM150. Below was the information about Perniagaan ISMI for March 2022: Balance as at 1 March 2022 : Subsidiary Ledger of Accounts Receivable: Pikir Sdn. Bhd. RM 2,000 Kilang Mesra RM 1,500 General Ledger: Accounts Receivable Control Accounts RM 3,500 Transactions during the month of March 2022: QUESTION 2 Required: a. Prepare Sales Journal and the Cash Receipts Journal. b. Prepare a subsidiary of Accounts Receivable and show its relationship with control account in General Ledger. EXERCISE Table of contents 3.2 ANSWER
3 QUESTION 3 Particulars RM Vehicles 40,000 Equipments 30,000 Cash 10,000 Bank 50,000 Accounts Receivable - Imad 20,000 Accounts Payable – Sahaba Enterprise 15,000 The following accounts balances are taken from the accounting book of FAFI Enterprise as at 30 November 2022. During December 2022, the following transactions occurred; Date Transactions Dec 1 Purchased vehicle RM25,000. 90% of the price was paid by cheque and the balance is paid by cash. 3 Paid telephone bill of RM150, water bill of RM100 and electricity bill of RM200 with cash. 9 Sold merchandise to Imad, RM7,000 terms 2/15, n/30. 10 Paid to Sahaba Enterprise debt of RM3,000 by cash and received a discount of RM300. 15 Imad returned merchandise RM700. 17 Cash sales of RM300. 20 Paid rent of his children’s house amounted RM700 with the business’ cheque. 22 Imad issued a cheque to pay half of the debt from sales on 9 December. 31 Paid Sahaba Enterprise debt of RM5,000 by cheque. 31 Purchased merchandise RM6,000 on credit from Kayangan Sdn Bhd with terms 2/10, n/30. Required : a. Prepare Special Journal and General Journal.. b. Posting to the other general ledger. c. Prepare Trial Balance as at 31 December 2022. EXERCISE Table of contents 3.3 ANSWER
3 QUESTION 4 Accounts RM Capital 17,075 Cash 629 Inventories 500 Purchases 3,500 Sales 6,000 Salaries Expense 1,800 Sales Returns and Allowances 25 Purchase Returns and Allowances 20 Sales Discount 100 Purchase Discounts 80 Rental Expense 1,138 Printing and Stationary Expense 162 Freight-In 120 General Expense 812 Accounts Receivable 2,050 Accounts Payable 1,080 Office Furnitures 2,840 Vehicles 3,000 Bank 7,579 Inventory as at 31 December 2022 700 The following information is taken from the book of Perniagaan Kamal on 31 December 2022. Required: a. Prepare Trial Balance as at 31 December 2022. b. Calculate: i. Net Sales ii. Cost of Goods Sold iii. Gross Profit iv. Net Profit EXERCISE Table of contents 3.4 ANSWER
5 ADJUSTMENT AT THE END OF ACCOUNTING PERIOD Table of contents
5 QUESTION 1 Johari Consultants provides consulting services on taxation. Here is the Trial Balance as at 31 December 2022. Johari Consultant Trial Balance As at 31 December 2022 Accounts Dr. (RM) Cr. (RM) Cash 11,400 Accounts Receivable 5,620 Supplies 1,050 Prepaid Insurance 2,400 Equipment 30,000 Notes Payable 10,000 Accounts Payable 12,350 Capital 20,000 Drawings 600 Service Revenue 13,620 Salaries Expense 2,200 Utilities Expense 1,300 Rent Expense 1,200 Miscellaneous Expense 200 Total 55,970 55,970 Additional information: 1.Supplies on hand at 31 December 2022 were RM750. 2.Depreciation expense of equipment during the year was RM2,000. 3.Interest of Notes Payable totally RM250 has not been paid. 4.Insurance expense for the year was RM1,800. 5.A customer has not paid RM750 for the services. Required: a. Prepare adjusting entries (description omitted). b. Prepare Adjusted Trial Balance as at 31 December 2022. c. Prepare Statement of Profit or Loss for the year ended 31 December 2022. d. Prepare Statement of Changes in Equity for the year ended 31 December 2022. e. Prepare Statement of Financial Position as at 31 December 2022. EXERCISE ANSWER Table of contents 5.1
5 QUESTION 2 Abdullah Enterprise is a business that offers a laundry service. Financial year ended 31 December each year. Unadjusted Trial Balance at 31 December 2022 are as follows. Abdullah Enterprise Unadjusted Trial Balance As at 31 December 2022 Account Dr. (RM) Cr. (RM) Cash 20,700 Accounts Receivable 10,000 Equipment 185,000 Accumulated Depreciation – Equipment 60,000 Vehicles 28,500 Accumulated Depreciation – Vehicles 13,100 Capital 97,000 Drawings 5,000 Service Revenue 114,900 Advertising Expense 14,300 Salaries Expense 15,600 Utilities Expense 2,500 Insurance Expense 2,400 Miscellaneous Expense 1,000 Total 285,000 285,000 EXERCISE ANSWER Table of contents 5.2
5 Additional information: 1.RM1,650 of the insurance was prepaid insurance. 2.Clothes that has been washed were sent to the Rumah Kebajikan Kanak-Kanak Desa Man on 31 December 2022. The bill RM3,500 was issued to the management of the home. 3. There was a total RM25,600 of unearned revenue has been included in the revenue. 4.Salaries RM1,570 has not been paid. 5.Bad debts RM675 would be written off. 6.Depreciation of equipment during the year was RM27,750. 7.Depreciation of vehicles during the year was RM5,700. Required: a. Prepare adjusting entries (description omitted). b. Prepare Adjusted Trial Balance as at 31 December 2022. c. Prepare Statement of Profit or Loss for the year ended 31 December 2022. d. Prepare Statement of Changes in Equity for the year ended 31 December 2022. e. Prepare Statement of Financial Position as at 31 December 2022. EXERCISE ANSWER Table of contents 5.3
5 QUESTION 3 Perniagaan Comel Unadjusted Trial Balance As at 30 June 2022 Unadjusted Trial Balance as at 30 June 2022 for Perniagaan Comel are as follows. Account Dr. (RM) Cr. (RM) Capital 40,200 Cash 9,500 Sales 78,200 Purchases 56,100 Accounts Receivable 5,400 Accounts Payable 7,800 Vehicles 60,000 Accumulated Depreciation – Vehicles 12,000 Prepaid Insurance 1,800 Salaries Expense 4,400 Inventories 1,000 Total 138,200 138,200 Additional information: 1.Inventories on 30 June 2022 was RM800. 2.Prepaid insurance was for a period of one year beginning 1 January 2022. 3.Salaries for the month of June 2022 RM400 has not been paid yet. 4.Depreciation of vehicles during the year was RM6,000. 5.As of 30 June 2022 there was RM3,000 credit sales revenue that has not been recorded. Required: a. Prepare adjusting entries (description omitted). b. Prepare Adjusted Trial Balance as at 30 June 2022. c. Prepare Statement of Profit or Loss for the year ended 30 June 2022. d. Prepare Statement of Changes in Equity for the year ended 30 June 2022. e. Prepare Statement of Financial Position as at 30 June 2022. EXERCISE ANSWER Table of contents 5.4
5 QUESTION 4 Unadjusted Trial Balance as at 31 December 2022 for Perniagaan Nautica are as follows. Perniagaan Nautica Unadjusted Trial Balance As at 31 December 2022 Account Dr. (RM) Cr. (RM) Cash 20,625 Accounts Receivable 14,125 Inventories 10,000 Prepaid Insurance 1,150 Equipment 30,000 Accumulated Depreciation – Equipment 11,500 Accounts Payable 6,000 Capital 41,500 Drawings 2,500 Sales 150,000 Sales Returns and Allowances 7,500 Purchases 106,850 Purchase Returns and Allowances 3,750 Salaries Expense 12,750 Rent Expense 7,250 Total 212,750 212,750 Additional information: 1.Inventories on 31 December 2022 was RM17,750. 2.Depreciation expense for equipment was RM5,750 a year. 3.RM315 salary was still unpaid at 31 December 2022. 4.Insurance expense for the year ended 2022 were RM325 5.Cash withdrawal RM275 by the owner had been not been recorded Required: a. Prepare adjusting entries (description omitted). b. Prepare Adjusted Trial Balance as at 31 December 2022. c. Prepare Statement of Profit or Loss for the year ended 31 December 2022. d. Prepare Statement of Changes in Equity for the year ended 31 December 2022. e. Prepare Statement of Financial Position as at 31 December 2022. EXERCISE ANSWER Table of contents 5.5
6 ACCOUNTING FOR CASH Table of contents
6 QUESTION 1 The Cash Book of Azlee Groshop shows a different amount compared to the Bank Statement balance as at 28 February 2022. Date Details RM Date Details Cheque Number RM 2022 2022 Feb 1 Balance b/f 7,500 Feb 1 Drawings 221101 585 10 M & M Bhd 850 15 Purchases 221102 1,000 14 AnitaTrading 200 18 Goh Trading 221103 350 16 Perniagaan Johan 1,400 19 Sheera Trading 221104 420 18 Muthu Sdn Bhd 1,500 21 Syarikat Gauri 221105 320 20 Sales 2,235 25 Mizan Enterprise 221106 1,230 26 Perniagaan Salina 225 28 Rent 221107 1,200 27 Perkongsian Lee&Tee 2,500 28 Salaries 221108 2,400 28 Butik JJ 2,350 28 Balance c/f 11,255 18,760 18,760 Cash Book (bank column) BANK STATEMENT BANK 1 MALAYSIA BERHAD Account Number: 114312122002 Azlee Groshop Jalan Seroja 55200KualaLumpur Date: 28 Feb 2022 Date Particulars Cheque number Cash Out Cash In Balance RM 2022 Feb1 Balance b/f 7,580 1 Cheque 221100 80 7,500 2 Cheque 221101 585 6,915 8 Cheque Book 15 6,900 11 Commission– Credit Transfer 350 7,250 17 Cheque 221102 1000 6,250 18 Deposit 850 7,100 22 Cheque 221103 350 6,750 23 Dividend– BDR Bhd 220 6,970 25 Deposit 200 7,170 26 Bank Charges 10 7,160 27 Insurance 220 6,940 28 Cheque 221104 402 6,538 28 KWSP– Debit Instruction 264 6,274 EXERCISE ANSWER Table of contents 6.1
6 Additional information: 1. A cheque (No. 221104) issued to Sheera Trading was wrongly recorded in the Cash Book. 2. A cheque received on 26 February 2022 was returned by the bank. Required: Prepare Bank Reconciliation Statement as at 28 February 2022. QUESTION 2 The balance of Cash Book of Perniagaan Maharani is different from the balance in its Bank Statement on 30 April 2022. The Cash Book and the Bank Statement are as follows: Date Particulars RM Date Particulars Cheque Number RM 2022 April1 Balance b/f 14,022 2022 April 3 Purchases 254321 4,170 2 Sales 2,406 5 Loo Ent 254322 5,040 4 Salim 7,092 9 Fixture & Fitting 254323 1,560 7 Abu 3,030 13 Sinaran Suria 254324 1,170 12 Sales 5,250 19 Purchases 254325 8,220 18 Rental Revenue 1,758 21 Nilam Trading 254326 3,330 25 Focus Trading 3,000 29 Purchases 254327 3,384 26 Samad 980 30 Balance c/f 16,860 28 Daud 6,196 43,734 43,734 CASH BOOK (bank column) EXERCISE Table of contents 6.2 ANSWER
6 Date Particulars Cheque Number Debit Credit Balance 2020 April 1 Balance b/f 14,562 3 Deposit 2406 16,968 5 Cheque 254321 4,170 12,798 7 Deposit 7092 19,890 9 Cheque 254322 5,040 14,850 12 Deposit 3030 17,880 13 Cheque 254323 1,560 16,320 14 Cheque 254320 540 15,780 15 Cheque Book 60 15,720 16 Cheque 254324 1,710 14,010 17 Insurance Premium 960 13,050 18 Credit Transfer- Acc. Receivable 4710 17,760 23 Cheque 254326 3,330 14,430 24 Dividend 720 15,150 28 Deposit 3,000 18,150 BANK STATEMENT Additional information: 1. A cheque (No. 254324) was wrongly recorded in the Cash Book 2. Cheque received from Daud was returned due to a non-sufficient fund. Required: a. Prepare Bank Reconciliation Statement on 30 April 2022 b. Prepare the adjustment entries. EXERCISE Table of contents 6.3 ANSWER
6 QUESTION 3 Solihin Enterprise has received a Bank Statement in May 2022. It was found out that the balance is different from the Cash book balance. The following are the Bank Statement and the Cash Book. 2022 Particulars Cash Out (debit)RM Cash In (credit)RM Balance RM May1 Balance 2,580(cr) 2 Cheque Number 612301 260 2,320 3 Cheque Number 612302 590 1,730 6 Deposit 8,500 10,230 10 Cheque Number 612303 4,250 5,980 17 Cheque Number 612305 2,830 3,150 19 Deposit 130 3,280 22 Dividend–Syarikat MZB 300 3,580 26 Cheque Number 612307 322 3,258 27 Fixed Deposit Interest 150 3,408 28 Cheque Number 612309 1,175 2,233 28 Rental– Standing Order 250 1,983 30 Insurance– Standing Order 850 1,133 30 Deposit 6,500 7,633 31 Bank Charges 20 7,613(cr) Date Particulars RM Date Particulars Cheque Number RM 2022 May1 Balance b/f 2,320 May 3 Furniture 612302 590 6 Sales 8,500 10 Purchases 612303 4,205 19 Commission 130 13 Office Equipment 612304 1,300 27 Syarikat Rajesh 320 17 Pemborong Liza 612305 2,830 29 Najwa Trading 2,240 18 Pemborong Lim 612306 1,000 30 Sales 6,500 26 General Expenses 612307 322 31 Chomel Trading 1,330 27 Peniagaan Zamri 612308 1,440 28 Pembekal Lau 612309 1,175 29 Siti Company 612302 500 31 Balance c/f 7,978 21,340 21,340 BANK STATEMENT CASH BOOK EXERCISE Table of contents 6.4 ANSWER
6 Additional Information: 1. A Cheque numbered 612303 was wrongly recorded in the cash book. 2. A Cheque from Rajesh that has been deposited on 27 May 2022 was found dishonoured by the bank. Required: a. Prepare a Bank Reconciliation Statement as at 31 May 2022. b. Prepare the adjustment entries. (description omitted) QUESTION 4 The Cash Book of Harum Manis Company shows a different balance from the Bank Statement balance as at 31 May 2022 Date Details RM Date Details Cheque Number RM 2022 2022 May 17 Hashim 237 May 1 Balance b/f 3,092 22 Govindasamy 240 7 Yoke Kwan 221102 120 31 Cheah 180 15 Ramu 221103 210 31 Balance c/f 3,235 30 Salmiah 221104 470 3,892 3,892 BANK STATEMENT Date Details Debit (RM) Credit (RM) Balance (RM) 2022 May 1 Balance b/f 3,092 (Dr) 7 Yoke Kwan 120 3,212 15 Cheque 237 2,975 19 Ramu 210 3,185 21 Cheque 240 2,945 30 Sufian : Credit Transfer 157 2,788 31 Sykt. Jaya : Standing Order 45 2,833 31 Bank Charges 32 2,865 (Dr) CASH BOOK Required: a. Prepare a Bank Reconciliation Statement as at 31 May 2022. b. Prepare the adjustment entries. (description omitted) EXERCISE Table of contents 6.5 ANSWER
7 ACCOUNTING FOR RECEIVABLES Table of contents
7 The financial information of Anggun Sdn Bhd at 31 July 2021 was as follows: QUESTION 1 Particulars Debit (RM) Credit (RM) Accounts Receivable 160,000 Allowance for Doubtful Accounts 2,000 Credit Sales 800,000 Sales Returns and Allowances 50,000 Required: Prepare the journal entries to record the Bad Debt Expense using the following methods (omit explanations): (i) 1% from net credit sales (ii) 5% from Accounts Receivable Date Transactions 24 July The company recognised a debtor, Andy Lau was declared bankrupt and unable to pay his debt RM10,000. 10 August Jackie Chan suffered losses and was unable to pay his RM13,000 debt. 14 October Andy Lau paid RM5,000 to settle his previous debt. Syarikat Leon Lai started his business on 1 January 2000. For the year 2021, beginning balance of Accounts Receivable is RM120,000 and the following transactions have occurred: QUESTION 2 Due to economic crisis, the company allocated 10% on the balance of Accounts Receivable for Allowance for Doubtful Accounts for the period ending 31 December 2021. No allowance has been allocated in previous years. Required : Record the journal entry for each transaction.(description omitted) EXERCISE ANSWER Table of contents 7.1
7 Perniagaan Mekar reports the following information in the Statement of Financial Position as at 31 December 2020. Accounts Receivable 1,000,000 Deduct: Allowance for Doubtful Accounts 60,000 Net Realisable Value 940,000 The followings are transactions related to Accounts Receivable for Perniagaan Mekar for the year 2021. QUESTION 3 RM RM 1 Credit Sales 2,600,000 2 Receipts from Accounts Receivable 2,300,000 3 Bad Debt (write-off) 65,000 4 Bad Debt Recovery 25,000 Required : a. Record the above transactions in general journal. b. Show the adjustment journal of Bad Debt Expense on 31 December 2021 if the allowance estimated at 5% of the balance of Accounts Receivable. RM Total net credit sales 72,000 Total cash sales 1,600 Cost of goods sold 54,000 Net Accounts Receivable 38,600 Beginning Balance of Allowance for Doubtful Accounts 3,000 Bad debt written-off 240 Total expenses excluding Bad Debt Expense 5,940 The rate of Allowance for Doubtful Accounts on net credit sales 5% The following information of Lavender Enterprise for the year ended 2021. QUESTION 4 EXERCISE Table of contents 7.2 ANSWER
7 Required: a. Calculate bad debt expense for the year 2021. b. Record the journal entry for bad debt written-off. c. Record the journal entry for bad debt expense. d. Prepare Allowance for Doubtful Accounts for the year 2021. e. Show the presentation of Accounts Receivable in the Statement of Financial Position (extracted) as at 31 December 2021. EXERCISE Table of contents 7.3 ANSWER
8 ACCOUNTING FOR INVENTORIES Table of contents
8 QUESTION 1 During June, the information about purchases and sales of inventory for ABC Company as follows: Date Explanation Kg Unit Cost (RM) Jun1 Beginning inventory 800 4.50 3 Purchases 3,000 5.00 16 Purchases 1,000 5.50 19 Sales 2,500 - 22 Purchases 3,000 4.50 24 Sales 3,000 - Required: a. Under perpetual inventory system, determine the cost of inventory on hand at 30 June and the cost of goods sold for June under average method (round-off the average cost to two decimal point). b. Under periodic inventory system, determine the cost of inventory on hand at 30 June and the cost of goods sold for June under average method (round-off the average cost to two decimal point). QUESTION 2 At the beginning of March, beginning inventory of Lelangit Enterprise is 1,500 units at RM7 per unit . During March, Lelangit Enterprise made the following purchases. Date Unit Unit Cost (RM) March 5 3,500 8.00 13 4,000 9.00 21 2,000 10.00 26 2,000 11.00 During March, 10,000 units were sold. Lelangit Enterprise uses a periodic inventory system. Required: a. Determine the cost of goods available for sale. b. Determine ending inventory and cost of goods sold under the FIFO method. c. Determine ending inventory and cost of goods sold under the LIFO method. EXERCISE ANSWER Table of contents 8.1
8 QUESTION 3 Below are the records of the beginning inventory, purchases and sales during the month of March 2022 for Perniagaan Jaslina. This business uses perpetual inventory system. March 1 Beginning Inventory 50 unit @ RM6 3 Sales 20 unit Price per unit RM8.50 6 Purchases 45 unit @ RM7 10 Sales 22 unit Price per unit RM8.50 23 Purchases 40 unit @ RM8 30 Sales 35 unit Price per unit RM9.00 Required: a. Compute the cost of goods sold and the ending inventory if Jaslina uses First In First Out (FIFO) method, Last In First Out (LIFO) method and Average Method QUESTION 4 Perniagaan Seri has prepared an inventory record for the month of January 2022 as follows: Date Explanation Units Unit Cost (RM) Total cost (RM) Jan 1 Beginning inventory 100 8 800 6 Purchases 60 9 540 13 Sales 70 20 1,400 21 Purchases 150 9 1,350 24 Sales 210 22 4,620 27 Purchases 90 10 900 30 Sales 30 25 750 For the month of January, the company recorded operational expenses amounted to RM1,900. Assume the company uses Periodic Inventory System. EXERCISE Required: a. Compute ending inventory unit b. Compute cost of ending inventory c. Prepare Statement of Comprehensive Income for the month ended 31 January 2022 for First In First Out (FIFO) method, Last In First Out (LIFO) method and Average Method Table of contents 8.2 ANSWER
9 ACCOUNTING FOR NONCURRENT ASSETS Table of contents
9 QUESTION 1 a. List three main characteristics of fixed assets. b. Give three examples of fixed assets item. c. Define the meaning of capital expenditure and revenue expenditure. d. What is depreciation and how is it computed under the straight-line method? e. Determine the item stated below whether it is capital expenditure or revenue expenditure. i Purchase price ii Ordinary recurring repairs to keep the machinery in good working order. iii Lubrication maintenance before new machinery is placed in service. iv Periodic lubrication maintenance after machinery is placed in service. v Major overhaul to extend useful life by three years. vi Sales tax is paid on the purchase price. vii Transportation and insurance while machinery is in transit from the seller to the buyer. viii Installation before new machinery is placed in service. ix Training of personnel for initial operation of the machinery. On February 2, 2022, a company purchased a used machine for RM10,000. The machine required installation costs of RM1,000 and insurance while in transit of RM500. All payments are made in cash. QUESTION 2 Acer Investments plans to develop a sales center. On March 31, 2022, in the first quarter, they spent the following amount by cash: RM Acquisition of land 15,000 Surveys and legal fees 600 Land clearing 200 Fencing 1,000 Install lighting and signage 860 Required: a. What amount should be recorded as the cost of land in the books of the company? b. Prepare related journal entries to record transaction on March 31, 2022. EXERCISE ANSWER Table of contents Required: a. Determine the cost of the machine to be recorded. b. Prepare journal entries to record the cost of the machine. QUESTION 3 9.1
9 QUESTION 4 On January 1, 2022, Anodel Inc. acquired a machine for RM1,000,000. The estimated useful life of the asset is 5 years. Salvage value (residual value) at the end of 5 years is estimated to be RM50,000. Required: a. Calculate the depreciation expense per year using the straight-line method. b. Calculate the amount of accumulated depreciation from the date asset is acquired until the end of year 2024. On January 1, 2022, MUIZ Sdn Bhd purchased a used machine for RM210,000. The company expects the machine to remain useful for five years and to have a salvage value (residual value) of RM10,000. The company’s account closing date is 31 December every year. Required: Compute the first three years’ depreciation expense, accumulated depreciation and book value on the machine for MUIZ Sdn Bhd using the following methods: i. Straight-line method ii.Reducing balance method. (Assuming the depreciation rate is 45.60%. Round up your answer to two decimal places) EXERCISE Table of contents QUESTION 5 QUESTION 6 On July 1, 2022, Syarikat Peralatan Deco sold office furniture for RM16,000 cash. The original cost of the office furniture was RM60,000. As of January 1, 2022, the accumulated depreciation is RM41,000. Depreciation expense for the first six months of 2022 was RM8,000. Required: a. Record the journal entry to update the depreciation expense and accumulated depreciation as at July 1, 2022. b. Compute the gain or loss as at the date of disposal. Show the journal entry record upon the disposal of the office furniture. c. If Syarikat Peralatan Deco sold office furniture for RM9,000 cash, compute the gain or loss as at the date of disposal. Show the journal entry record upon the disposal of the assets. 9.2 ANSWER
9 Teguh Auto exchanged an old truck plus cash for a new truck. The old truck had a book value of RM42,000 (cost RM64,000 less accumulated depreciation RM22,000) and a fair value of RM26,000. Additionally, Teguh Auto had to pay RM17,000 for the new truck. Required: a. Compute the cost of the new truck. b. Compute the gain or loss on disposal of the truck. c. Record the journal entry for the exchange of the truck. EXERCISE Table of contents QUESTION 7 9.3 ANSWER
10 ACCOUNTING FOR LIABILITIES Table of contents
10 QUESTION 1 On March 1, 2021, Perniagaan Mewah signs a RM50,000, 6% notes payable with Bank Berjaya for 6 months. Accounting period ended 30 June each year. Required: a. Prepare the journal entries on 1 March 2021. b. Prepare the journal entries to record interest payable on 30 June 2021. c. Prepare the journal entries for the redemption of Notes Payable on maturity date as at 31 August 2021. QUESTION 2 Lulzbot.com sells 6,000 units of its product for RM500 on 15 October 2022. The selling price includes a oneyear warranty on parts. It is expected that 3% of the units will be defective and the repair costs is estimated at the average of RM50 per unit. On 25 December 2022, a warranty contracts honoured, amounting to a cost of RM6,000. Later, on 15 January 2023, warranty contracts were honoured at a total cost of RM500. Required: a. Prepare the journal entries to record the warranty honoured on 25 December 2022. b. Prepare the journal entries to record Warranty Payable as at 31 December 2022. c. Prepare the journal entries to record warranty honoured on 15 January 2023. QUESTION 3 On 1 January 2021, Jay Bourn Sdn. Bhd. issued 8% bond at a face value of RM300,000. The bonds will mature on January 1, 2026. Interest on the bonds will be paid twice a year, on 1 July and 1 January. JBSB financial year ended on 31 December each year. Required: a. Prepare the journal entries to record the issuance of bonds on J1 January 2021. b. Prepare the journal entries to record interest expense on 1 July 2021. c. Prepare the journal entries on 31 December 2021. d. Prepare the Statement of Financial Position as at 31 December 2021. EXERCISE ANSWER Table of contents 10.1
10 QUESTION 4 Tabata Sdn Bhd issues a RM600,000 , 10%, 20 years mortgage note on 1 January 2022 to obtain financing for a new building. The terms provided for monthly instalment payments is RM8,137 (including annual interest 10%). Required: a. Prepare journal entries to record the issuance of mortgage payable. b. Prepare Mortgage Instalment Payment Schedule for the first three months instalment (round up answers to nearest Ringgit Malaysia) c. Prepare journal entries to record third instalment payment on 31 March 2022. EXERCISE Table of contents 10.2 ANSWER
11 ACCOUNTING FOR EQUITY Table of contents
11 QUESTION 1 RM Capital Ahmad 20,000 Capital Basri 40,000 Capital Chan 30,000 Balance as at 31 December 2021: RM Total non-current assets 50,000 Total current assets 56,100 Total liabilities 25,000 All partners agreed to share the profit based on the total capital contributed in partnership. Basri contributed an additional capital of RM10,000. For accounting period ended 31December 2021 net profit for the partnership is RM30,000. The 2021 year ended balances of each partner’s drawings account are as follows: Ahmad RM1,500 Chan RM2,000. Required: Prepare Statement of Changes in Equity for the year ended 31 December 2021. Particulars RM Beginning capital 67,100 Net profit 23,320 Drawings 5,530 Required: Prepare Statement of Changes in Equity for the year ended 30 September 2022. Sani Enterprise provides financial information for the year ended September 30, 2022 is as follows: QUESTION 2 The following information is taken from the books of ABC Enterprise. Balance as at 1 January 2021: During the year ended 30 September 2022, Sani transferred RM9,410 from his personal savings account to Sani Enterprise’s bank accounts as an additional investment EXERCISE ANSWER Table of contents 11.1
QUESTION 3 The following information is taken from the books of BGP Enterprise. All partners agreed to share the profit based on ratio 1/3 for each partner. For accounting period ended 30 June 2022, the net profit for the partnership is RM60,000. Bobby and Gan added more capital of RM5,000 each and Patricia made drawings RM2,500. Required: Prepare Statement of Changes in Equity for the year ended 30 June 2022. QUESTION 4 The following information is taken from the books of Berjaya Berhad accounts as at 31 March 2021. Authorised share Ordinary share : 20,000,000 unit @ RM1.00 per share Preference share : 2,000 unit @ RM50.00 per share Issued and paid in capital Ordinary share : 10,000,000 unit @ RM1.00 per share Preference share : 2,000 unit @ RM50.00 per share Retained earnings : RM2,000,000 Balance as at 1 July 2021: RM Capital Bobby 30,000 Capital Gan 40,000 Capital Patricia 36,000 During the current accounting period, the company issued another 1,000,000 units of ordinary shares. The net profit reported is RM1,800,000 and the amount of dividends is RM450,000. Required: Prepare Statement of Changes in Equity for Berjaya Berhad for the year ended 31 March 2022. EXERCISE 11 Table of contents 11.2 ANSWER