AA015 ACCOUNTING 1

AA015 ACCOUNTING 1 [TUTORIAL QUESTIONS] 2021/2022

Topic 2
Basic Accounting Concepts

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AA015 ACCOUNTING 1 [TUTORIAL QUESTIONS] 2021/2022

QUESTION 1 (C1)
What is meant by Generally Accepted Accounting Principles? What is the purpose of having
this principle?

QUESTION 2 (C2)
State the relevant accounting concepts for the following descriptions.

a. Ruzita’s Company has applied the straight line method to record depreciation
expense and accumulated depreciation. For the year 2010, the Accountant has
changed the straight line method to the reducing balance method without recording
in the Financial Statements.

b. Tabaya Company has bought a piece of land costing RM50,000 but the market value
is RM55,000. The company is not sure which amount should be recorded.

c. Puan Rohaidas thinks that stock inventory that was recorded as Last In First Out
(LIFO) can be changed to First In First Out (FIFO) at any time.

d. Amanda’s Company gives an opinion that depreciation expense for furniture and
office equipment must not be recorded in the company’s accounts.

e. A vehicle’s maintenance expense of Jaju Enterprise is RM7,000 for July 2010. This
amount includes RM800 for maintenance expense which belongs to the owner’s
private car.

QUESTION 3 (C2, C3)
For each of the following cases, you have to identify the accounting concepts involved and
explain why you agree or disagree with the action taken.

a. Deposits paid by customers for future merchandise orders have been recognized as
revenue for the current period even though the merchandise has not been sent yet.
This is to increase the sales and profits of the company.

b. The travel expenses of the business owner with his family touring Europe, have been
added as business travel expenses.

QUESTION 4 (C2)
State the relevant accounting concepts for the following descriptions.

a. Information recorded is based on the actual costs incurred in transactions.
b. Every business is accounted separately from its owner.
c. Financial statements reflect the assumption that the business continues operating.

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d. All transactions are recorded in Ringgit Malaysia.
e. A company reports the details of Financial Statements that would impact users’

decision.
f. The life of a company can be divided into time periods, such as months and years.

QUESTION 5 (C2)

Identify the following items either as assets, liabilities, revenue, expense or equity:

1 Accounts Receivable 26 Stationery

2 Accounts Payable 27 Stationery expense

3 Bank loan 28 Commission receivable

4 Equipment 29 Sales

5 Capital 30 Purchases

6 Salaries expense 31 Inventory

7 Salaries payable 32 Rental revenue

8 Cash 33 Unearned rent revenue

9 Bank 34 Interest expense

10 Revenue Receivable 35 Interest payable

11 Interest Revenue 36 Bad debt expense

12 Utilities expense 37 Depreciation expense

13 Insurance expense 38 Buildings

14 Prepaid insurance 39 Freight-in

15 Notes Payable 40 Freight-out

16 Notes Receivable 41 Prepaid Rental

17 Service revenue 42 Equipment / Fittings

18 Cash drawings 43 Office equipment

19 Advertising expense 44 Office supplies expense

20 Advertising payable 45 Sales Discounts

21 Unearned revenue 46 Purchase Discounts

22 Land 47 Shares

23 Commission revenue 48 Long-term investment

24 Supplies 49 Vehicle

25 Supplies expense 50 Patents

QUESTION 6 (C3, C4)
At the beginning of the year, Ortiz Eyewear had total assets of RM900,000 and total liabilities of
RM440,000. Answer the following questions.

a. If total assets decreased RM100,000 during the year and total liabilities increased
RM80,000 during the year, what is the amount of owner’s equity at the end of the year?

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b. During the year, total liabilities decreased RM100,000 and owner’s equity increased
RM200,000. What is the amount of total assets at the end of the year?

c. If total assets increased RM50,000 during the year and owner’s equity increased
RM60,000 during the year, what is the amount of total liabilities at the end of the year?

QUESTION 7 (C3, C4)

Identify the effect of each transaction whether it increases (+) and/or decreases (-) on assets,
liabilities or owner’s equity.

No. Transactions Assets Liabilities Owner’s
1 The owner brings in RM10,000 cash into the business. Equity

2 Open a business account at Maybank with RM4,000

cash.

3 Provide services to a customer named Mr. Ali worth
RM950 with the promise of paying it next month.

4 A debtor settles a RM150 debt with a cheque.

5 The owner withdraws cash from the business for
personal use.

6 Salary expense of RM1,000 paid to an employee.

7 Received a utility bill of RM500 but will only be paid the
following month.

8 A customer has paid RM500 for services that will be
provided next month.

9 Purchase furniture for business premises worth RM7,000
on credit.

10 Provide billing services of RM1,500 to customers for
services that has been given.

11 Took a loan from Bank Rakyat worth RM20,000.

QUESTION 8 (C4) Page 4
Selected transactions for Fabulous Flora are listed below.

1. Make cash investment to start business.
2. Purchased equipment on account.
3. Paid salaries.
4. Billed customers for services performed.
5. Received cash from customers billed in (4).
6. Withdrew cash for owner’s personal use.
7. Incurred advertising expense on account.
8. Purchased additional equipment for cash.
9. Received cash from customers when service was performed.

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Required:
Describe the effect of each transaction on assets, liabilities, and owner’s equity.

QUESTION 9 (C4)
Alma’s Payroll Services entered into the following transactions during May 2020.

1. Purchased computers for RM15,000 from Bytes of Data on account.
2. Paid RM3,000 cash for May rent on storage space.
3. Received RM12,000 cash from customers for contracts billed in April.
4. Performed payroll services for Magic Construction Company for RM2,500 cash.
5. Paid Northern Ohio Power Co. RM7,000 cash for energy usage in May.
6. Alma invested an additional RM25,000 in the business.
7. Paid Bytes of Data for the computers purchased in (1) above.
8. Incurred advertising expense for May RM900 on account.

Required:
Describe the effect of each transaction on assets, liabilities, and owner’s equity.

QUESTION 10 (C3, C4)
The following are En. Hadith’s transactions for January 2007.

a) En. Hadif added RM30,000 cash as capital into his business.
b) Purchase office equiment RM5,000 on credit.
c) Paid RM1,000 in cash for ofice rental for January.
d) Paid staff salary in cash RM2,000.
e) En. Hadif withdrew RM500 cash for his own use.
f) Advertising expense payable RM350.
g) Received cash from debtor RM6,000.
h) Paid advertising expense in transaction (f).

Required:
Prepare a summary of transaction based on the transactions above using the following
format:

Transaction Cash Accounts Equipment = Accounts Expense Capital
(a) +/- Receivable +/- Payable Payable +/-

+ +/- +/- +/- + 30,000
30,000

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QUESTION 11 (C3, C4)
Su Feng opens her own law office on July 1, 2020. During the first month of operations, the
following transactions occurred.

1. Su invested RM11,000 in cash in the law practice.
2. Paid RM800 for July rent on office space.
3. Purchased equipment on account RM3,000.
4. Performed legal services for clients for cash RM1,500.
5. Borrowed RM700 cash from a bank on a note payable.
6. Performed legal services for client on account RM2,000.
7. Paid monthly expenses: salaries and wages RM500, utilities RM300, and advertising RM100.
8. Su withdrew RM1,000 cash for personal use.

Required:
Prepare a tabular analysis of the transactions.

QUESTION 12 (C3, C4)
Ashraf decides to start a consultancy firm. He opens up a new company “Forever Excellent”.

1. He invests RM20,000 cash as capital.
2. Forever Excellent purchases a machine costing RM5,000 and pays by cash.
3. Forever Excellent buys office stationary such as papers and files at RM2,000 on credit

from Ah Seng Enterprise. Stationary is an expense. Ah Seng allows payment to be made
next month.
4. Forever Excellent has rendered its first consultancy service to its client Bunga Sari Sdn.
Bhd. It received cash of RM3,500.
5. At the end of the month, Forever Excellent pays RM2,500 salary to the staff by cash.
6. Forever Excellent has rendered its consultancy service to another client Daisy Sdn. Bhd.
Daisy Sdn. Bhd. will pay the bill of RM6,000 later in March.
7. Due to urgent need, Ashraf withdraws RM2,000 cash from Forever Excellent for his
personal use.

Required:
Prepare a tabular analysis of the transactions.

QUESTION 13 (C3, C4) Page 6
What effect do the transactions below have on the owner’s equity ?

(a) Fran Johnson invested RM5,000 in the business.
(b) She bought equipment on account, RM2,400.
(c) She paid half of the bill owed to the creditor.
(d) She received RM2,000 in fees.
(e) She paid salaries for the week, RM800.

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(f) She withdrew RM400 from the business.
(g) She paid rent for the month, RM900.
(h) Inventory of supplies decreased RM350 during the month.

QUESTION 14 (C3, C4)
Determine what accounts are affected, by how much, and if it is an increase (+) or decrease (-).

Nov. 5 Invested RM7,000 cash and RM400 of supplies into the business
7 Received RM4,200 for services rendered
9 Purchased equipment on account, RM3,700
11 Paid RM750 for supplies
14 Paid salaries, RM2,100
16 Paid RM3,500 for land
17 Paid RM2,000 on account from Nov. 9 transaction
19 Paid utilities, RM200
20 Paid RM300 for supplies and RM700 for equipment
21 Received RM4,700 for services rendered
25 Withdrew RM2,000 cash for personal use
30 Inventory of supplies showed RM600 of supplies on hand

Required:
Record the effect of each transactions in the following table:

Date Cash Supplies Equipment Land Accounts Capital
Payable

QUESTION 15 (C3, C4)
On June 1, Bob Freidland started his lawn care service. Listed below are the transactions for the
month of June. Record the transactions using the sample table below.

June 1 Invested RM2,200 cash and equipment with a book value of RM3,500
5 Received RM375 for lawn care service
7 Received RM1,100 for lawn care service
11 Purchased equipment for RM2,000, paying RM1,000 cash and giving a note for
RM1,000 for the remainder
15 Paid gas bill, RM275
19 Withdrew RM200 cash for personal use
21 Purchased supplies for RM100 on account

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25 Paid RM400 on outstanding note (June 11 transaction)
30 Received RM925 for lawn care service

Date Assets = Liabilities + Owner’s Equity
June 1

QUESTION 16 (C3, C4)
John Silver started the Good Cleaning Service on July 1, 2018. Record the following transactions
using the sample table below.

July 1 Started business; invested RM10,000 cash and equipment with book value of
RM2,500.

5 Purchased RM300 of cleaning supplies on account.
7 Received RM2,700 for cleaning services (Fees Income).
9 Paid RM200 of the RM300 owed for purchase of cleaning supplies from July 5

transaction.
13 Paid RM810 rent for month.
15 Paid employee 2 weeks’ wages of RM940.
21 Purchased new cleaning machines for RM3,000 on account.
24 Withdrew RM1,000 for personal use.

Date Assets = Liabilities + Owner’s Equity
July 1

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Topic 3
Accounting Cycle

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QUESTION 1 (C1)
Explain the uses of the following source documents:

a. Debit note
b. Delivery note

QUESTION 2 (C1, C2)
State and explain two types of transportation cost.

QUESTION 3 (C1)
Explain the main purposes of the trial balance.

QUESTION 4 (C2, C3)
The following are some of the transaction involved by Syarikat Buku Zizi Sdn. Bhd.

a) Pay debt to suppliers
b) Return damaged books to client
c) Client cleared their debt
d) Sold vehicle on cash
e) Sold books on credit
f) Goods sold by cash
g) Bought books by cash
h) Zizi bought in cash into the company
i) Purchase goods on credit
j) Purchase office equipment on credit
k) Paid office rental
l) Depreciation of buildings
m) Purchase office supplies in cash
n) Zizi withdrew cash for personal use
o) Zizi took a book from the store to give to his son as a present

Required :
Identify each transaction above by listing the appropriate journals use.

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QUESTION 5 (C2, C3)
Below are some typical transactions incurred by Lesmana Supply:

a. Received credit for merchandise purchased on credit.
b. Payment of employee wages.
c. Sales discount taken on goods sold.
d. Income summary closed to owner’s capital.
e. Purchase of office supplies for cash.
f. Depreciation on building.
g. Purchase of merchandise on account.
h. Return of merchandise sold for credit.
i. Payment of creditors on account.
j. Collection on account from customers
k. Sale of merchandise on account.
l. Sale of land for cash.
m. Sale of merchandise for cash.

Required:
For each transaction, indicate whether if would normally be recorded in a cash receipts journal,
cash payments journal, sales journal, purchases journal or general journal.

QUESTION 6 (C2, C3)
Miaoli Eyewear had the following transactions during March.

a. Collected cash on account from Keeluang Group.
b. Purchased equipment by signing a note payable.
c. Sold merchandise on account.
d. Purchased merchandise on account.
e. Paid RM2,400 for a 2-year insurance policy.

Required:
Identify the journal in which each of the transactions above is recorded. The company uses the
special journals described in the chapter plus a general journal.

QUESTION 7 (C3, C4)
Perniagaan Pelita Ilmu (PPI) which is located at Bertam Indah. PPI closes its accounts at the end
of each year. Account balances on 30 November 2019 are as follows:

Accounts RM
Cash 14,000
Accounts Receivable 27,600
Inventories 27,500

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Equipment 42,000
Accumulated Depreciation - Equipment 9,000
Accounts Payable 31,200
Capital 45,700
Drawings 5,000
Sales 244,500
Sales Returns and Allowances 4,600
Sales Discount 3,900
Cost of goods sold 172,000
Salaries expense 27,700
Utilities expense 6,100

The following are transactions that have been carried out by PPI for the whole month of
December 2019.

December 1 Purchased goods from Perniagaan Cerdik on credit RM10,500, terms FOB
destination 1/10, n/30.
2 Sold goods on credit to Celik Ilmu RM4,500, terms FOB shipping point
2/15, n/30. Freight charges amounted to RM150.
5 Returned goods purchased from Perniagaan Cerdik on December 1
RM400.
9 Received return of goods from Celik Ilmu for sales on December 2
RM350.
11 Received a cheque from Celik Ilmu for sales on December 2
16 Send Perniagaan Cerdik a cheque for purchases made on December 1.
26 PPI took a book from the business to give to the daughter. The book cost
RM90.
30 PPI paid RM250 for electricity by cash.
30 PPI paid employees’ salaries amounted to RM1,200 in cash

Required:
(i) Prepare journal entries to record the transactions that took place during the month
of December 2019.
(ii) Prepare subsidiary ledgers, Accounts Receivable and Accounts Payable Control
accounts, Cash account and Bank account.

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QUESTION 8 (C3, C4)
Perniagaan Insaf (PI) is a supplier of retail goods. The following are the the account balances as
at May 31, 2019.

Cash Debit (RM) Credit (RM)
Bank 14,060
Accounts Receivable 10,900 900
Notes Receivable 9,000 25,800
Inventories 27,000 51,870
Equipment 13,800 78,570
Accumulated Depreciation – Equipment 3,810
Accounts Payable
Capital 78,570

Additional information:
On June 1, 2019, the subsidiary ledgers contains the following information:

Accounts Payable: Bakar RM 6,000
Umar RM 10,8s00
Osman RM 9,000

Accounts Receivable: Yassin RM 1,500
Hamzah RM 4,500
Hassan RM 3,000

The following transactions occurred in the month of June 2019:

June 3 Sold goods to Husin RM2,400 on credit terms 2/10, n/30, FOB destination.
7 Received cheque payment from Hassan RM2,100.
11 Paid cash RM 180 for freight services for transaction on June 3.
12 Paid rent for the month of January RM600 in cash.
13 Husin cleared all his debts with a cheque.
15 Paid Osman by cheque to settle its debts and received a discount of RM90.
17 Bought goods from Ali Enterprise RM960 with credit terms 2/10, n/30, FOB
destination.
23 Cash sales RM5,160.
23 Returned goods to Ali RM300.
24 Cash purchases RM700.
25 Took goods for personal use RM100.
26 Settled all debts with Ali by cheque.

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Required:
i. Record all the June transactions into the related journals.
ii. Post the journal entries into the appropriate subsidiary ledgers, control accounts and
general ledgers.
iii. Prepare a trial balance.

QUESTION 9
Harun owns a bookstore called Perniagaan Harun Sdn. Bhd. The following is the trial balance for

the month ended March 31, 2019.

Accounts Debit (RM) Credit (RM)
2,360
Accounts payable 3,500
Accounts receivable 600 50
Drawings 60
Freight-in 50,000 12,290
Buildings 560 72,000
General expense 400
Electricity expense 180 300
Bad debts expense 450 20,000
Depreciation expense – buildings 340
Depreciation expense – vehicles 5,800 200
Purchases 1,000
Purchase discount 40 680
Sales discount 200 189,880
Insurance Expense 1,000
Inventory, April 1, 2019
Sales 34,000
Vehicles
Capital 250
Allowance for Doubtful Debts
Loan 11,500
Purchase returns and allowances 189,880
Sales returns and allowances
Accumulated depreciation – buildings
Accumulated depreciation – vehicles
Cash
Total

Additional information:
a. Inventories at March 31, 2019, was RM 1,500
b. Loan made on July 1, 2018, must be settled before June 30, 2019.

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Required:
(i) Prepare a Statement of Comprehensive Income for the year ended March 31, 2019.
(ii) Prepare a Statement of Financial Position as at March 31, 2019.

QUESTION 10 (C3, C4)
Selesa Rumah Sdn Bhd (SRSB) started its business operation on March 1, 2019, by selling
carpets and furnitures. The following are transactions that occurred in the month of March
2019:
Mar 1 Started business operation by bringing in cash RM500,000 and a used lorry valued at

RM65,000. Out of the total amount of RM500,000, RM450,000 was bank-in into a
Current Account at Bank Islam Malaysia Bhd.
3 Bought 5 computers by cash for the use of the business valued at RM3,000 each from
Hebat Pejabat Sdn. Bhd.
9 Bought carpets and furnitures valued at RM45,000 and RM88,000 respectively on
credit with terms 2/10, n/60 from Danibot Bhd.
11 Purchased merchandises again from Permai Perabot Sdn. Bhd. worth RM20,000.
14 Sold 2 rolls of carpets at RM3,500 per roll to Satria Sdn. Bhd.
15 Received Credit Note from Danibot Bhd. for damaged furnitures RM16,000.
19 Sold 4 pieces of furnitures at RM2,500 each to Perniagaan Canggih where 2 pieces
were paid by cheque and the balance on credit.
23 Purchased 6 rolls of new carpets at RM2,000 each. Out of 6 rolls, 4 rolls were paid by
cheque and the rest on credit with terms of 2/10, n/60 from Mayna Sdn. Bhd.
24 Paid shop rental RM2,000 by cheque.
25 Paid an employee wages at the rate of RM30 per day. (Assume the total working
days for the month was 25 days) by cheque.
26 Sold 3 pieces of furniture to Seindah Rumah Sdn. Bhd. on credit worth RM12,000.
27 Sent Credit Note to Seindah Rumah Sdn. Bhd. for goods returned RM4,000.
28 Settled Mayna Sdn. Bhd. debts and half of Danibot Bhd. debts. All transactions was
done by cheque.
29 Perniagaan Canggih settled their debts.

Required:
(i) Record the above transactions into the appropriate journals.
(ii) Post to general ledgers and subsidiary ledgers.
(iii) Prepare a Trial Balance as at 31 March 2019.

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Topic 5
Adjustment At The End Of Accounting

Period

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QUESTION 1 (C1)
i. Define revenue and expense.
ii. State the difference between revenue expenditure and capital expenditure.

QUESTION 2 (C1)
(a) Why are adjusting entries required?
(b) What are the four types of adjusting entries? For each type of adjusting entry, define
and give an example.
(c) State 4 errors that does not affect the trial balance.

QUESTION 3 (C1)

(a) For each account listed below, put an X in the appropriate column.

Account Assets Liabilities Revenue Expenses

Unearned rental revenue

Income tax expense

Interest revenue

(b) Match the following adjusting journal entries (Table 1) with appropriate explanation (Table

2)

Table 1

(i) Dr Salaries expense RM5,000

Cr Accrued salaries expense RM5,000

(ii) Dr Interest expense RM800

Cr Accrued interest expense RM800

(iii) Dr Insurance expense RM1,200

Cr Prepaid insurance RM1,200

(iv) Dr Unearned professional fees revenue RM2,500

Cr Professional fees revenue RM2,500

(v) Dr Accrued interest revenue RM750

Cr Interest revenue RM750

Table 2
A To record the earning of previously unearned income.
B To record accrued interest expense.
C To record accrued interest revenue.
D To record the use of prepaid insurance expense.
E To record accrued salaries expense.

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QUESTION 4 (C2, C3)
Classify the following into capital and revenue items:

(a) Petrol costs for a delivery van
(b) Depreciation of a delivery van
(c) Repairs to a delivery van
(d) Purchase of a motor vehicle to be used in the business
(e) Insurance on motor vehicles
(f) Painting the exterior of a new building
(g) Cost of extension to a building

QUESTION 5 (C2, C3)
In the first three months of trading Hedjo Plastics incurred the following expenditures:

Item Amount (RM)
Delivery vehicle 20,000
Painting of the business name and logo on the delivery vehicle 2,000
Vehicle insurance and fuel 2,500
Office stationery including paper and printing inks 1,600
Wages 6,000
Shop premises 80,000
Construction costs for an extension to the shop premises 15,000
Shelving and display units 4,000
Computer and other equipment 5,800
Advertising costs 1,300
Delivery charges for equipment, shelving and display units 750
Delivery charges for office supplies 50
Electricity 600
Business insurance premium 450
Purchases of plastic sheeting, pipes and mouldings for resale 14,400
Telephone and Internet 180
Legal fees to acquire the shop premises 2,700
Shop cleaning 150
Installation charges for equipment, shelving and display units 670
Delivery charges for plastic products 900
Accountant’s fees 450

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Required:
Prepare a table like the one below and use it to identify from the list above those transactions
that are capital expenditures and those that are revenue expenditures. Calculate the total
capital expenditure and revenue expenditure of the business.

Capital expenditure RM Revenue expenditure RM

Total capital expenditure Total revenue expenditure

QUESTION 6 (C2, C3)
Mrs. Nurin is the owner of Mika Khasiat Bakery (MKB). She has been doing business in the town
area of Arau, selling bread and cakes as well as receiving orders from customers. MKB has been
operating for 2 years. MKB business has been flourishing as it gets overwhelming response from
its customers. To further develop its business, the owner has done a variety of expenditure.
Among it is to buy a used van worth RM40,000, including the cost of insurance and road tax of
RM5,000. Repainting the van with labeling of Mika Khasiat Bakery worth RM1,350 and fitted
with new tires worth RM1,200. Mrs. Nurin also bought a new flour mixer machine worth
RM15,000 with RM1,000 installation cost.

Required:
(a) Identify all expenditure incurred by Mrs. Nurin as either revenue expenditure or capital
expenditure
(b) Calculate the total revenue expenditure and capital expenditure

QUESTION 7 (C3)
Prepare the adjusted journal entries for the following transactions:

a. From 1 January 2019, the business rented its premises from another firm and was
charged RM1,200 per month. Rent was paid on the last day of the month, one
month in advance. Rent paid as of 30 June 2019 was RM8,400. The accounting
period ended 30 June 2019.

b. An annual insurance premium of RM9,600 was paid on 1 February 2019. The
accounting period ended 31 October 2019.

c. Wages were paid weekly. A total of RM12,000 was paid. As at 31 December 2019,
accrued wages were RM800. The accounting period ended 31 December 2019.

d. On 17 December 2019, a hotel received an advanced payment of RM250 from a
customer to book a room for two nights from 20 March next year. The accounting
period ended 31 December 2019.

e. TVS Satellite Services started business installing household satellite TV and
telephone equipment on 1 April 2019. During its first year of trading, the company
has written off RM280 from G Alvarez RM280 for bad debt.

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QUESTION 8 (C3)
Prepare adjusting entries at December 31 for the following transactions:

a. Weekly salaries of RM10,000 for a five-day week are payable on Friday. The last
payroll date was Friday, December 25.

b. The supplies on hand at the beginning of the year were RM2,000. On December 31,
RM500 of supplies were left.

c. Unearned rental revenue at the beginning of the year was RM5,000. At December
31, 40 percent of that revenue has been earned.

d. Interest earned on a customer’s note receivable was RM100.

QUESTION 9 (C3, C4)
The following is the unadjusted Trial Balance quoted from the bookkeeping of Perkhidmatan

Seri owned by Mr. Ahmad for the month ended December 31, 2019.

Perkhidmatan Seri
Unadjusted Trial Balance
Ended December 31, 2019

Item Debit (RM) Credit (RM)

Cash 4,320 1,200
1,400
Accounts Receivable 2,500 920
9,740
Office supplies 360 5,800

Prepaid Insurance 480 19,060

Office equipment 6,800

Accumulated Depreciation- Office equipment

Accounts Payable

Unearned consultation revenue

Capital

Drawings 800

Consultation revenue

Salaries expense 3,000

Rental expense 800

Total 19,060

Additional information:
1. Expired insurance during the month of December is RM 80.
2. Office supplies on hand at 31 December is RM 150.
3. Depreciation expense for office equipment for December is RM 200.
4. Accrued Salaries at 31 December RM 240.

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5. Consultation services totaling RM 600 was given to a customer, but the bill has not been
delivered to the customer.

6. Unearned revenue that has not been acquired in December is RM320.

Required:
a. Prepare adjusting journal entries on December 31, 2019.
b. Prepare the Adjusted Trial Balance as at December 31, 2019.
c. Prepare Statement of Comprehensive Income for the year ended December 31,
2019.

QUESTION 10 (C3, C4)
Abdul Wahub owned a shop called Perniagaan Burung AW. Here is the Unadjusted Trial Balance

as at 31 December 2019.

Perniagaan Burung AW
Unadjusted Trial Balance as at 31 December 2019.

RM RM

Capital 17,075

Drawings 629

Inventories at Jan. 1 2019 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 discount 80

Rental expense 1,138

Food & Medicine expense for Birds 162

Freight – in 120

Accounts Receivable 2,050

Accounts Payable 1,080

Shop equipment 2,840

Van 3,000

Cash 8,391

Total 24,255 24,255

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Additional information:
1. Inventories at 31 December 2019 is RM700.
2. Abdul Wahub recorded personal expenditure of RM15 as cash.
3. RM200 from the rental expense was for the month of January 2019.
4. Accrued Clerk salary for December 2019 at RM400.
5. All non-current assets are depreciated by 5% at cost value.

Required :
a. Show records of adjustments involved.
b. Prepare Statement of Comprehensive Income for the year ended December 31,
2019.
c. Prepare Statement of owner's equity for the year ended December 31, 2019.
d. Prepare the Statement of Financial Position as at December 31, 2019.

QUESTION 11 (C3, C4)
Perniagaan Al-Haj (PAH) conducts a business of selling clothes and Muslim headscarf. The

following are the Trial Balance as at 30 June 2019 before adjustment.

Perniagaan Al-Haj RM
Trial Balance as at 30 June 2019

RM

Cash 15,200

Accounts Receivable 8,500

Inventories on 1/7/2019 5,000

Vehicles 80,000

Accumulated Depreciation - Vehicles 16,000

Accounts Payable 18,000

Capital 51,800

Drawings 5,000

Sales 70,000

Purchases 35,000

Sales Returns and Allowances 2,700

Purchases Returns and Allowances 2,200

Sales discount 500

Purchase discount 1,200

Freight – in 800

Freight – out 1,600

Wages expense 500

Insurance Expense 1,200

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Interest Revenue 5,500 1,100
Salaries expense 161,500
Rental revenue 1,200
Total 161,500

Additional information:
1. Inventories on June 30, 2019 was RM6,300.
2. Prepaid Insurance is RM 800.
3. Unrecorded Salary payables for June 2019 were RM500.
4. Service for rental has not been delivered by the value of RM400.
5. Interest revenue receivables RM200.
6. A debtor has been declared bankrupt and its debt of RM400 is to be written off as bad
debts.
7. Purchase discount of RM200 was recorded in a purchase returns and allowances.
8. Vehicles depreciation expense is charge equally every year. The usage life of the vehicle
is 5 years and has no residual value.

Required :
a. Prepare the adjusting entries on June 30, 2019.
b. Prepare a Statement of Comprehensive Income for the year ended June 30, 2019.
c. Prepare the Statement of Financial Position as at June 30, 2019.

QUESTION 12 (C3, C4)
Bumi Maju Sdn. Bhd. (BMSB) runs a business of selling a variety of decorative lamps. BMSB

accounting period ends on December 31 every year. The following is the Unadjusted Trial

Balance of BMSB as at December 31, 2014.

Bumi Maju Sdn. Bhd. (BMSB)
Unadjusted Trial Balance as at December 31, 2014.

Account RM RM

Cash 107,640

Supplies 1,000

Accounts Receivable 96,600

Inventories January 1, 2014 83,200

Prepaid insurance 5,800

Prepaid rental 5,760

Land 320,000

Building 220,000

Accumulated Depreciation - Buildings 66,000

Office equipment 111,200

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Accumulated Depreciation - Office Equipment 4,000 22,240
Accounts Payable 7,400 75,800
Capital 625,800 440,360
Sales 1,103,000
Sales returns and allowances 14,600
Sales discount 2,800
Purchases 24,000 5,200
Purchase returns and allowances 76,000
Purchases discount 9,200 800
Freight – in 4,000
Interest revenue 1,716,200 1,716,200
Advertising expense
Salaries expense
Delivery expense
Utilities expense
Total

Additional information:

1. Depreciation of non-current assets:

a. Buildings 2%

b. Office equipment 15%

2. December’s salary for 5 employees and a supervisor are still outstanding. Supervisor

monthly salary is RM2,000 while an employee's salary is RM 1,200 each, will be paid

at the beginning of January 2015.

3. Prepaid Insurance for 2015 is RM 800, the insurance policy will expire on February 1,

2015.

4. On February 1, 2014, BMSB has paid rent for a 12-month period and debited it in

prepaid rental account.

5. BMSB has purchased office supplies amounting to RM1,000 on June 3, 2014. The

balance of the unused supplies at December 31, 2014 was RM250.

6. Delivery expense of RM500 has been recorded in the freight-in account.

7. Calculation of physical inventories on December 31, 2014 shows a total of

RM111,000.

Required:
a. Prepare journal entries for related adjustment transactions.
b. Prepare BMSB Statement of Comprehensive Income for the year ended December
31, 2014.
c. Prepare Statement of Owner's Equity for the year ended December 31, 2014.
d. Prepare the Statement of Financial Position as at December 31, 2014.

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QUESTION 13 (C3, C4)

Kulai Sdn Bhd (KSB) prepares its financial statements ended 30 June yearly. The following are its

partial accounts on June 30, 2019:

RM RM

Rental expense 960

Utilities expense 4,000

Commission revenue 8,000

On 30 June 2019, the following information was obtained:
1. Payable rental is RM120
2. Received commission RM400 for the month of July 2019
3. Outstanding utility RM200 for May 2019

Required: Prepare journal entries to record the above transactions (omit explanation)
(a) State the ending balance for the following accounts: rental expenses, utilities
(b) expense and commission revenue.

QUESTION 14 (C3, C4)
The following information is obtained from Dynasty Enterprise account balances for the year
ended December 31, 2006.

RM

Capital (1 January 2006) 60,000

Van 10,000

Accumulated depreciation – Van 2,000

Office equipment 15,000

Accumulated depreciation – Office equipment 3,000

Inventories (1 January 2006) 37,000

Cash 8,900

Purchases 180,000

Sales 250,000

Bad debt expense 300

Accounts Receivable 50,000

Accounts Payable 16,450

Insurance expense 500

Purchases Discount 750

Salaries expense 23,500

Sales returns and allowances 2,500

Miscellaneous expense 2,500

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Purchases returns and allowances 500
Drawings 2,500

Additional information:
a. Inventories as at December 31, 2006 worth RM25,000
b. Prepaid insurance RM200
c. Bad debt written-off RM650
d. Miscellaneous expense of RM250 was still accrued.
e. Van is depreciated at 20% per annum using straight line method.
f. Office equipment is depreciated at 10% per annum using straight line method.

Required:
i. Prepare journal entries to record the adjustment for information (a) to (f) by
omitting explanation.
ii. Prepare Dynasty Enterprise Adjusted Trial Balance on 31 December 2006.
iii. Prepare Dynasty Enterprise Statement of Comprehensive Income for the year ended
31 December 2006
iv. Prepare Dynasty Enterprise Statement of Financial Position as at 31 December 2006

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Topic 6
Accounting For Cash

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QUESTION 1 (C1)
i. State the importance of preparing a bank reconciliation statement to an
organization.
ii. List the reasons that cause a balance difference in the cash book and bank
statement.
iii. Define dishonoured cheque.

QUESTION 2 (C1)
i. Explain “deposit in transit” and “outstanding cheque”.
ii. List three steps for preparing a bank reconciliation.

QUESTION 3 (C2)
For items 1 – 6 below, indicate what you would do in the preparation of a bank reconciliation
for James Corporation. Use one of the following appropriate letters:

a. Add to the book balance
b. Deduct from the book balance
c. Add to the bank statement balance
d. Deduct from the bank statement balance
e. Exempt from the bank reconciliation

1. A RM100 cheque was incorrectly recorded as a cash disbursement of RM90.
2. A cheque for RM200 issued by Bonita Corporation was mistakenly charged to James

Corporation account by the bank.
3. A deposit of RM350 made by Coates Corporation was incorrectly credited to James

Corporation.
4. The company received a customer cheque of RM600 that was incorrectly entered as a cash

receipt of RM560.
5. A mistake was made in making out a cheque and the check was immediately cancelled.
6. A deposit made by the company was mistakenly not included in the bank statement.

QUESTION 4 (C2, C3)
These are the information from Syarikat Intan Caldena’s bank statement and cash book.

Information about bank statement and cash book Action on cash book /
a) Charge for bank services RM50 bank statement

b) Cheque from customer worth RM200 was recorded as RM196
in cash book.

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c) Interest revenue on current account balances worth RM20

d) Credit memo received due to Receivable Notes worth
RM3,000.

e) Debit memo received for service charge on Receivable Notes
worth RM10.

f) Cheque received worth RM927.10 was mistakenly recorded as
RM972.10

g) A cheque received was recorded in cash book but not in the
bank statement worth RM320

h) Cheque that has been recorded out from cash book but still not
been debited in bank statement worth RM400.

i) Cheque for client worth RM200 was recorded as RM190 in cash
book.

j) A memorandum from the bank stating that a NSF cheque was
deposited by the company worth RM80.

QUESTION 5 (C3)
Listed below are transactions involving the bank reconciliation statement. Some transactions
required adjusting entries on the depositor’s books. Identify those that do and prepare the
appropriate adjusting entries.

a. Deposit in transit, RM650
b. Bank charge for printing cheques, RM30
c. Incorrect entry of RM440 on depositor’s records for a cheque for rent expense of

RM400
d. Erroneous bank charge of RM70 against depositor’s account for cheque issued by

another company.
e. Return of a customer’s cheque marked NSF for RM80.

QUESTION 6 (C3, C4)
The following is Perniagaan Bianca Powers’ bank reconciliation statement, cash book and bank

statement as at 30 June 2013 for the month of May.

Perniagaan Bianca Powers

Bank Reconciliation Statement as at 31 May 2013

RM RM

Cash Balance Per Bank Statement 3,501.40

Add : Deposit in Transit 137.45√

3,638.85

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Deduct : Outstanding Cheque: 130.60 553.30
Cheque no 134 68.75 3,085.55
Cheque no 137 243.50√
Cheque no 138 110.45√
Cheque no 139

Debit balance as per Bank Statement

Cash Book (Bank column)

Date Details RM Dates Details Cheque No RM
June
Balance b/f 3,085.55 June 140 120.00√
1 Sayudi Enterprise 140.60√ 1 Rental 141 345.60√
Cash 237.75√ Office Equipment 142 725.90√
5 Cash 406.80√ 8 Salary and wages 143 250.50√
7 Haslinda Bhd 76.90√ 12 Telephone 144 133.75√
Arabella 163.50√ 13 Retail Expenses 145 683.40
12 Cash 398.45√ 19 Isko Berhad 146 708.85√
Wan Hussin 361.35√ 22 Salary and wages 147 79.85
21 Cash 273.95√ 27 Vehicle expenses 148 125.60
26 Christian Woo Ent 142.65√ 28 Insurance
Cash 193.70√ 30 Balance c/f 2,737.95

30 Liberty Ent 430.20 _______
5,911.40 5,911.40

BANK BERJAYA MALAYSIA BERHAD Balance
Bank Statement as at 30 June 2013
3,501.40
Date Details Debit Credit 3,638.85
June 4,017.20
243.50√ 137.45√ 3,773.70
1 Balance b/f 120.00√ 378.35√ 3,653.70
Deposit 345.60√ 4,060.50
406.80√ 3,714.90
2 Deposit 725.90√ 3,955.30
Cheque 138 10.50 240.40√ 3,979.80
24.50 4,739.60
5 Cheque 140 759.80√ 4,013.70
6 Deposit 4,003.20

Cheque 141 Page 30
7 Deposit

Interest on bond
8 Deposit

Cheque 142
13 Service charge

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Cheque 144 133.75√ 273.95√ 3,869.45
Cheque 143 250.50√ 336.35√ 3,618.95
22 Deposit 450.00 3,892.90
Cheque 146 708.85√ 3,184.05
26 Deposit 3,520.40
Cheque book 25.00 3,495.40
27 EFT: Mariammah Ent 3,945.40
30 Cheque 139 110.45√ 3,834.95

Required:

a. Prepare a Bank Reconciliation Statement as at 30 June 2013.
b. Prepare the adjusting entries.

QUESTION 7 (C3, C4)
Perniagaan Semambu’s cash book balance differ from the company’s Bank Statement balance
at 30 April 2013. The cash book and bank statement are as follows:

MAYBANK BHD

BANK STATEMENT

Perniagaan Semambu Acc No : 087-161555667-2
Date : 30 April 2013
No. 1 Jalan OKK Daud

Kg Merinding,

W. P Labuan

Date Description Cheque Debit Credit Balance

No

2013

April

1 Balance 8,250
7,370
5 Cheque 1013 880 6,770
600 9,430
10 Cheque 1014 10,320
1,020 9,300
11 Deposit 15 2,660 9,285
320 890 8,965
Deposit 10,615
5,765 1,650 4,850
12 Cheque 1012 2,650 2,200
1,870 4,070
Cheque Book 1,550 5,620
2,400
14 Cheque 1016 2,350 8,020
10,370
16 Deposit

28 Cheque 1018

Cheque 1017

29 Deposit

30 Dividend (Syarikat Adlyna

Bhd.)

Sykt Tana Man (EFT)

30 Deposit

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Cash Book (bank column)

Date Particulars RM Date Cheque Particulars RM
no
2013 Balance 880
April Sales 2013 600
Angelo Bhd 690
1 Denna April 320
3 Bonita Bhd 2,560
5 Perniagaan Bimbo 7,230 2 1013 Rental 5,765
8 Peruncit Mamat 220
25 Balance c/f 2,660 4 1014 Vehicle Repairs
28 8,880
29 890 6 1015 Commission 260
30
1,650 10 1016 Freight-in 20,175

2,640 24 1017 Yna & Co

1,870 27 1018 Arjen Sdn Bhd

2,350 29 1019 Telekom Malaysia

885 Bhd

30 1020 Syarikat Sri Jaya

____ 1021 Takaful Bhd

20,175

Additional Information : All information in the Bank Statement are correct

Required:
a. Prepare a Bank Reconciliation Statement as at 30 April 2013.
b. Prepare the adjusting entries.

QUESTION 8 (C3, C4)
Perniagaan Mazwin Cantik’s Bank Statement balance as at 30 June 2014 differ from the Cash
book balance. These are the Cash Receipts Journal, Cash Payments Journals (bank column only)
and Bank Statement as at 30 June 2014.

Cash Receipts Journal

Date Details Bank Discount
2014
June 5 Sales 950
Hwa Thai 1,200
10 Comission 500
15 Sales 600
25 Helmi 580
28 Zamarul 730
30 Total 4,560
30

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Cash Payments Journals

Date Details / Cheque No Bank Discount
2014
June 10 Salary -500 1,000
Purchases -501 2,200
15 Shila Amzah -502 720
18 Rental -503 500
24 Adlin -504 380
26 Saloma -505 450
27 Purchases -506 480
30 Total 5,730
30

Date Details BANK BAIDURI Debit Credit Balance
2014 June Bank Statement
700 950 5,450
1 Cheque 550 1,200 4,750
1 825 4,200
1 Balance 498 1,000 500 5,150
6 Cheque 499 4,150
11 Cheque 500 2,200 580 5,350
11 Deposit 1,500 6,175
15 Cheque 501 500 6,675
16 Deposit 503 380 4,475
16 Dividend 504 2,975
Deposit 505 40 2,475
25 Cheque 321 405 2,095
27 Auto debit (rental) 2,055
27 Cheque 1,650
28 Cheque 2,230
27 Bank Charges
Cheque
Domestic clearance cheque

Additional information:
1. Starting balance for cash book is RM4,200
2. All information in the bank statements are correct.

Required :
a. Prepare a Bank Reconciliation Statement as at 30 June 2014.
b. Prepare journals entries to record adjusting entries in the cash book.

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QUESTION 9 (C3, C4)
Perniagaan Cengal received a bank statement for August 2013 and it showed a difference with
the company’s cash book. The cash book (bank column only) and bank statement are as
follows:

Bank Maju Malaysia Bhd

Bank Statement

Perniagaan Cengal Sdn Bhd Acc No :1234-4567-8999

No. 3, Jalan 1/3 Date : 31 August 2013

06000 Jitra

Kedah

Date Details Cheque No Debit Credit Balance

2013 RM RM

August 1 Balance b/f 4,140

10 Cheque 053351 2,840 1,300

11 Deposit 940 2,240

Deposit 1,325 3,565

12 Cheque 053350 500 3,065

13 Cheque 053352 740 2,325

18 Cheque 053353 2,650 325

20 Syt Meranti Bhd Dividend 600 275

25 Fixed Deposit Interest 340 615

28 Cheque 053355 1,240 625

28 Deposit 49 576

31 Bank charges 16 592

Total 7,986 3,254

Cash Book (bank column)

Date Details RM Date Cheque No Details RM
2013
August 1 Balance b/f 2013 Purchases 2,840
Sales Freight-in 740
8 Pin Pin 3,640 August 6 053351 Umy
10 Monathi Syt. Kizashi Bhd. 2,650
16 Kedai Ah Huat 940 11 053352 Horma 890
20 Balance c/f Tenaga Nasional
31 1,325 14 053353 Bhd 1,240
Salaries 65
490 18 053354
450
1,250 25 053355 8,875

1,230 28 053356

30 053357

8,875

Required : Page 34
a. Prepare a Bank Reconciliation Statement as at 31 August 2013.
b. Prepare the adjusting entries.

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QUESTION 10 (C3, C4)
Bank statement for January 2006 for Rashid Enterprise showed a debit balance of RM5,460 and
cash book credit balance of RM3,055.

Cash Book (bank column)

Date Details Cheque Total Date Details Cheque Total
No (RM)
No (RM)

2006 2006
Jan 1
Balance b/f 3,955 Jan 2 Rental 1234 1,000
3 Sales 1235 800
9 Yasmin 14587 1,520 9 Maruko 1236
15 Sales 1237 13,000
27 Hafizah 17812 1,000 15 Purchases 1238 750
31 Balance c/f
2022 4,200 20 Utilities 3,400

222234 5,220 25 Salaries

3,055

18,950 18,950

Date Details Bank Statement Debit Credit Balance
Cheque RM RM
2006 No RM
Jan 1 1,000 1,250 4,955
8 Balance 1234 3,200 3,955
10 Cheque 14587 800 5,205
12 Deposit 1,000 4,200 8,405
14 EFT ( Electronic Fund Transfer) 1235 2,500 7,605
16 Cheque 17812 6,605
18 NSF ( Non-Sufficient Fund) 13,000 4,105
20 Insurance 2022 750 8,305
22 Deposit 1236 15 (4,695)
25 Cheque 1237 (5,445)
30 Cheque (5,460)
Bank charges

Additional Information:
1. All records in the bank statement are correct.
2. The bank has mistakenly debited Rashid Enterprise with the amount of
RM2,500.

Required:
a. Prepare a Bank Reconciliation Statement as at 31 January 2006.

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QUESTION 11 (C3, C4)
Purnama Sdn. Bhd. (PSB) Bank Statement as at 31 January 2007 shows a cash balance of

RM25,014. Whereas the company’s account records are as follows:

Cash Book (bank column)

Date Details Cheque Total Date Details Cheque Total
No (RM)
No (RM)
1005 600
2007 2007 1006 150
Jan 1 2233 1,850
Balance b/f 19,110 Jan 3 Rental
8 Sales 1007 460
9 Rahim 2115 2,300 5 SESB 1008 230
1009 795
3366 2,109 12 Accounts Payable –
1010 4,780
Pelita Ilmu
21,004
20 Juliana 4522 750 16 Purchases 29,869
29 Upin
30 Ipin 8922 3,450 18 Utilities

6621 2,150 22 Accounts Payable –

Cantek Manis

26 Accounts Payable

- Dambai Maju

31 Balance c/f

29,869

Bank Statement

Date Particulars Cheque No Debit Credit Balance
2007 RM RM RM
Balance 2115 2.300
Jan 1 Deposit 1005 600 20,075
10 Cheque 1006 150 2,109 22,375
10 Cheque 3366 2,750 21,775
12 Deposit 15 21,625
14 EFT ( Electronic Fund Transfer) 2233 1,850 23,734
14 Bank charges 4522 750 26,484
15 Deposit 675 26,469
19 NSF ( Non-Sufficient Fund) 1007 460 28,319
20 Auto debit (loan) 1008 230 27,569
20 Cheque 1009 975 26,894
23 Cheque 26,219
25 Cheque 25,989
29 25,014

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Additional Information:
1. All records in the bank statement are correct.
2. A cheque (No. 2233) received from a client has been debited to account payable
and credited to bank account.

Required:
a. Prepare a Bank Reconciliation Statement as at 31 January 2013 .
b. Prepare adjusting entries as at 31 January 2013 (Omit explanation).

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Topic 7
Accounting For Receivables

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QUESTION 1 (C1)
i. Explain the definition of accounts receivable.
ii. List the reasons that lead to bad debts.

QUESTION 2 (C1)

i. Explain 2 methods to account for bad debt.
ii. Explain the recovery of bad debts.

QUESTION 3 (C2)
On December 10, 2014, Chong and Don did not pay their respective debts amounting to RM800
and RM1,200 respectively. This amount has been regarded by the credit department as bad
debts. Show journal entries to record the above transaction.

QUESTION 4 (C2, C3)
Below are some accounts of the Jay Balding Company, as of January 2018.

General Ledger RM210,000
Accounts Receivable RM2,600
Allowance for Doubtful Debts

Accounts Receivable Ledger RM1,400
D. Grego RM1,200
J. Philips

Additional information:

Mar. 5 D. Grego account was determined to be uncollectible

Apr. 14 Wrote off J. Philips account as uncollectible

Required:
i. Prepare the entries needed to record the information above. (omit explanation)
ii. If, J. Philips later paid his account in full, what entries would be necessary. (omit
explanation)

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QUESTION 5 (C2, C3)
Atlas Company uses the direct write-off method to account for its uncollectible accounts. In
2011, credit sales were RM130,000. On March 7, 2012, a customer owing RM1,600 was
declared bankrupt.

Required:
i. Prepare journal entries relating to uncollectible accounts for 2011. (omit
explanation)
ii. Prepare journal entries relating to uncollectible accounts for 2012. (omit
explanation)

QUESTION 6 (C3, C4)
The December 31, 2011, trial balance of the Mark Company before adjustments included the

following accounts:

Debit (RM) Credit (RM)

Allowance for Doubtful Debts 2,000

Sales 830,000

Sales returns and allowances 10,000

Mark estimates its bad debts based upon 2 percent of net sales. What amount should Mark
record as bad debt expense for 2011?

QUESTION 7 (C3, C4)

The following is the beginning balance information of Syarikat Awana in 2014.

Accounts Receivable RM188,000

Allowance for Doubtful Debts RM7,600

Additional Information :
1. Credit sales amounted to RM250,000.
2. Cash receipts from customers amounted to RM252,000.
3. Allowance for doubtful debts is estimated at 5% of Accounts Receivable.

Required :
a. Calculate the ending balance for Account Receivable.
b. Calculate the amount for allowance for doubtful debts account in 2014.
c. Show the journal entries for bad debts adjustments.
d. Calculate the net realizable value for receivables for the year ended 2014.

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QUESTION 8 (C3, C4)
The 2013 total sales of Syarikat Bintang amounted to RM448,000. However, 80% of sales are
considered as credit while the rest are cash sales. An initial balance of allowance for doubtful
debts was RM7,000. The company estimates that 2% of the credit sales cannot be collected.

Required :
a. Compute the bad debts for the year 2013.
b. Calculate the final balance for the allowance for doubtful debts in 2013.
c. Prepare the bad debts adjusting entry for 2013.

QUESTION 9 (C3, C4)
The following is Perniagaan Wawasan’s information for the year ended 2014.

Net credit sales RM
Total cash sales 72,000
Cost of goods sold 1,600
Accounts Receivable Balance after deducting write-off 54,000
Initial balance of allowance for doubtful debts account 38,600
Bad debts writen off 3,000
Total expenses excluding bad debts expenses 240
The allowance for doubtful debts on net credit sales 5,940
5%

Required :
a. Calculate the bad debts expenses for the year 2014.
b. Show journal entries to record the offset of bad debts and bad debts.
c. Prepare an Allowance for Doubtful Debts account for the year 2014.
d. Prepare Statement of Comprehensive Income for the year ended Dec 31, 2014.
e. Show an excerpt of Statement of Financial Position as at Dec 31, 2014.

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QUESTION 10 (C3, C4)
Encik Ahmad is an accountant at Syarikat Norhanis. Due to a fire that destroyed all the books of
original entries and source documents, he had to redo all the journal entries based on the
debtors’ surviving records. The Accounts Receivable record prepared is as follows:

Balance b/f Accounts Receivable RM
Sales RM 770,000
Allowance for Doubtful Debts 75,000 Cash 5,400
890,000 Cash 2,500
5,400 Allowance for Doubtful Debts 192,500
-----------
Balance c/f 970,000
----------- ======
970,000
======

Required :
a. Prepare journal entries to record each transaction shown in the Accounts
Receivable.
b. Calculate the allowance for doubtful debts at the end of the year if the company
uses a 5% approach on the Receivables Account balance.
c. Prepare an Allowance for Doubtful Debts account. For your information, the initial
balance of the Allowance Account is RM5,450.
d. Prepare journal entries to record bad debts expense.

QUESTION 11 (C3, C4)
Syarikat Pelita Ilmu

Statement of Financial Position as at 31 December 2013 (Excerpt)

Accounts Receivable RM135,500
Less: Allowance for Doubtful Debts (8,350)
Net Realizable Value
RM127,150

The following transactions occurred during the year ended 31 December 2014:

Jan 13 The Company waived Mr Suib's bad debts because of bankruptcy of RM3,600.
Mar 5 Hassan has paid off his debts which was waived totaling RM1,500.
Jun 20 The company made a credit sale of RM58,000.
Jul 6 Customers returned goods worth RM10,000.

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Sept 8 Receive cash from customers RM62,000.
Oct 2 The company received cash from a customer that have been written-off RM4,000.

Syarikat Pelita Ilmu uses a 3% approach from the Accounts Receivable balance for the
allowance for doubtful debts.

Required :
a. Prepare journal entries to record each transaction above.
b. Prepare Accounts Receivable.
c. Prepare an Allowance for Doubtful Debt accounts and adjusted journal entries.
d. Show an excerpt of the Statement of Financial Position as at 31 December 2014

QUESTION 12 (C3,C4)

Pudu Jaya Sdn Bhd (PJSD) is in the business of selling and distributing imported teak furniture

from Indonesia. The following are information relating to Accounts Receivable quoted from the

Balance Sheet as at 31 July 2007:

Accounts Receivable RM
Allowance for doubtful debts 200,000

3,000

The following are PJSB transactions as at 31 July 2007:

1. En. Halim has disappeared after owing PJSB RM500.
2. En. Latif has repaid all his 2005 bad debts of RM1,000.
3. Allowance for doubtful debts as at 31 July 2007 is estimated at 2% of the balance of

Accounts Receivable.

Required:

Provide journal entries to record adjustments relating to accounts receivable as at 31 July 2007
using the allowance method. (omit explanation).

QUESTION 13 (C3)
At December 31, 2017, the Avec Company’s account balances for accounts receivable and the
related allowance for uncollectible accounts were RM800,000 and RM40,000 respectively. An
aging of accounts receivable indicated that RM71,100 of the December 31 receivable may be
uncollectible. What is the realizable value of accounts receivable?

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QUESTION 14 (C2)
The financial information of Anggun Sdn Bhd at 31 July 2017 was as follows:

Particulars Debit Credit
RM RM
Accounts receivable 160,000
Allowance for doubtful debts 2,000
Credit sales 50,000 800,000
Sales returns and allowances

Required:
Prepare the journal entries to record the bad debt expenses using the following methods:

i. 1% from net credit sales
ii. 5% from accounts receivable

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Topic 8
Accounting For Inventories

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QUESTION 1 (C1)
i. List two methods in inventory evaluation.
ii. Differentiate between the first-in-first-out (FIFO) and weighted-average method.

QUESTION 2 (C1)
i. Explain two types of inventories.
ii. Which method of inventory cost will show the same ending inventory value under
both a perpetual and a periodic inventory system?

QUESTION 3 (C2)
For each of the transactions below, present the journal entries for both periodic and perpetual
systems.

1. Purchased RM1,600 of merchandise on account.
2. Sold merchandise costing RM1,000 on account for RM3,000.
3. Paid freight charge of RM25 on merchandise purchased.
4. Returned RM500 of merchandise previously bought.

QUESTION 4 (C2)
The following information from Matrix Sdn. Bhd. is in relation to its inventories for the year
2016:

1 Jan Purchased 60 units of books by cash from a publisher at RM70 per unit
10 Apr Sold 20 units of books at RM90 per unit cash
8 Sept Purchased 120 units of books at RM85 per unit on credit
1 Oct Customer returned 5 units of books at RM90 per unit
3 Nov Sold 110 units of books at RM100 per unit on credit
12 Dec Returned 10 units of book to publisher at RM70 per unit

Required:
Based on the information above, use the perpetual and periodic inventory system methods to
prepare the journal entries for Matrix Sdn. Bhd. (omit explanation)

QUESTION 5 (C2, C3)
Read Book Store completed the following merchandising transactions in the month of June:

June 1 Purchased merchandise on account from Edar Enterprise RM10,000
2 Sold merchandise on account RM6,000. The cost of merchandise sold was
RM4,500
5 Received credit RM700 from Edar Enterprise for merchandise returned
9 Paid Edar Enterprise RM5,800 in cash

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11 Purchased merchandise for cash RM8,700
15 Sold merchandise for cash RM10,200; the merchandise sold had a cost of

RM6,900
19 Purchased merchandise from Pintar Supply RM4,000 on credit

Required:
Using the perpetual inventory system, journalise the given transactions. (omit explanation)

QUESTION 6 (C2, C3)
The following information pertains to a given product:

Jan. 1 Inventory 15 units RM20
Feb. 20 Purchase 12 units 24
April 10 Purchase 20 units 25
Nov. 15 Purchase 16
8 units

The physical count of ending inventory reveals that 16 units are on hand.

Required:
i. Using the first-in-first-out method, what is the inventory cost?
ii. Using the weighted-average method, what is the inventory cost?

QUESTION 7 (C2, C3)
The beginning inventory and subsequent purchases of product N follow:

Jan. 1 Balance 10 units @ RM11
Mar. 10 Purchase 14 units @ RM12
June 12 Purchase 18 units @ RM13
Sept. 16 Purchase 16 units @ RM14
Dec. 8 Purchase 20 units @ RM15

A count of ending inventory revealed that 32 units were on hand.

Required:
Compute the ending inventory using the following methods:

i. First-in, first-out
ii. Weighted average

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QUESTION 8 (C3, C4)
The following transactions are related to Syarikat Bob Mesra for January 2013:

Jan 1 Inventory balance of 80 units at RM1.50 per unit
6 Bought 240 units at RM1.60 per unit
10 Sold 200 units at RM4.00 per unit
15 Bought 300 units at RM1.70 per unit
21 Sold 250 units at RM4.30 per unit
26 Bought 200 units at RM1.90 per unit
28 Sold 220 units at RM4.50 per unit

Note: Syarikat Bob Mesra uses the First-in-First-out Method (FIFO)

Required:
Compute the ending inventory cost as at 31 January 2013 and calculate the cost of goods sold
and gross profit for the month using:

(i) Perpetual inventory system.
(ii) Periodic inventory system.

QUESTION 9 (C3, C4)
Syarikat Chong Wai updates its inventory records at the end of each accounting period. The
following are information about its inventories:

Date Particulars Units Unit Cost Total
RM RM
Jan 1 Opening Inventory 100 4 400
Jan 20 Purchase 400 5 2,000
May 25 Purchase 200 6 1,200
Sept 27 Purchase 300 7 2,100
1000 5,700
Total

Based on physical stock count, the inventory as at 31 December 2012 found that 400 units were
still in stock.

Required:
Calculate the ending inventory value as at 31 December 2012 if the company uses:

(i) First-in-first-out
(ii) Weighted-Average

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QUESTION 10 (C3, C4)
Syarikat Jamil Abdillah updates the inventory using perpetual system.The following shows the
purchases and sales for March 2013:

Purchases Sales
Price per unit
Date Particulars Units Cost per unit Units
RM RM
70
Mar 1 Opening Inventory 100 50 80 100
3 Purchases 130 110
4 Sales 60 60 110
10 Purchases
16 Sales 200 70
19 Purchases
25 Sales 40 80

Required:
Calculate the ending inventory, cost of goods sold and gross profit for the month ended 31
March 2013 using the following methods:

(a) First In First Out Method
(b) Moving – Average Method (2 decimal places)

QUESTION 11 (C3, C4)

Syarikat Komputer Saleh Yacop (SKSY) has prepared the following inventory records for January

2013:

Date Items Quantity Cost per unit Selling Price per unit

Jan 1 Opening Inventory 100 RM 8

6 Purchase 60 RM 9

13 Sales 70 RM 20

21 Purchase 150 RM 9

24 Sales 210 RM 22

27 Purchase 90 RM 10

30 Sales 30 RM 25

From the company's accounting records for January, the company has incurred RM1,900 on
operating expenses. The company uses the periodic inventory system.

Required:
a. Prepare a separate Statement of Comprehensive Income using FIFO and Weighted-
Average method.

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b. As the Financial Director of SKSY, what methods would you recommend for
inventory valuation that will enable the company's goals to be achieved by:
(i) Minimizing taxes
(ii) Reporting the highest operating turnover

QUESTION 12 (C3, C4)
Widuri Enterprise runs a business selling mobile phones in Bandar Baru Uda. The sales and
purchases transactions for April 2006 are as follows:

Date Items Units Price per unit (RM)
April 1 Opening Balance 12 550
Purchases 10 580
4 Sales 11 670
7 Purchases 6 560
13 Sales 8 670
19 Sales 2 670
26

All transactions are in cash and Widuri Enterprise practices a perpetual inventory system.

Required:
(i) Prepare journal entries relating to the sale of inventories on April 19, 2006 using the
Moving-Average Method.
(ii) Calculate the final inventory value as at 30 April 2006 if it uses the periodic inventory
system and the inventory valuation method of First-In-First-Out (FIFO).
(iii) Based on information in (ii), calculate the gross profit value for April 2006.

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