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BBM205/05 Business Accounting 1
Question 1
Lion Sdn Bhd is a manufacturer of garden furniture. The company has consistently used weightage average cost in valuing inventory, but it is interested to know the effect on its inventory valuation of using First-In First-Out method (FIFO).
At 28 February 2019 the company had inventory of 4,000 standard p lastic tables, and has computed its value on each side of the two bases as:
| Basis | Unit Cost (RM) | Total Value (RM) |
| FIFO | 16 | 64,000 |
| Weighted average | 13 | 52,000 |
During March 2019 the movements on the inventory of tables were as follows:
| Date | Number of unit | Production Cost per unit |
| Production: | ||
| 8 March | 3,800 | 15 |
| 22 March | 6,000 | 18 |
| Revenue: | Sellin price per unit | |
| 12 March | 5,000 | 15.40 |
| 18 March | 2,000 | 13.00 |
| 24 March | 3,000 | 16.50 |
| 28 March | 2,000 | 18.00 |
Required:
- Using FIFO, compute cost of closing inventory, sales and gross profit/ loss as at 31 March 2019.
- Using Weight age Average Cost method, compute cost of closing inventory, sales and gross profit/ loss as at 31 March 2019.
Show relevant workings. In arriving at the total inventory values you should make calculations to t wo decimal places (where necessary) and deal with each inventory movement in date order.
[20 marks]
Question 2
From the following particulars, you are required to find out the errors in cash book and bank statement by using missing method and prepare Bank Reconciliation Statement as on 31 December 2019, for Selena Enterprise:
| No. | Transactions | Amount (RM) |
| 1. | Bank Overdraft as per Bank Statement | 17,000 |
| 2. | Cheque issued but not encashed during the December | 2,200 |
| 3. | Dividends on shares collected by banker | 2,300 |
| 4. | Interest charged by the bank recorded twice in the Cash Book | 500 |
| 5. | Cheque deposited as per Bank Statement not entered in Cash Book | 3,400 |
| 6. | Credit side of the Bank column in Cash Book cast short | 1,000 |
| 7. | Interest dues paid by bank as per standing instruction not recorded in Cash Book | 1,200 |
| 8. | Uncredited cheque due to outstation | 3,900 |
Question 3
Below is the information extracted from the book of ABC Sdn Bhd:
| Accounts | Amount (RM) |
| Land | 500,000 |
| Building | 200,000 |
| Motor vehicles | 120,000 |
| Plant and machinery | 70,000 |
| Retained profit as at 01.01.2019 | 312,150 |
| 8% debenture | 150,000 |
| Ordinary share | 200,000 |
| Accumulated depreciation as at 31.12.2019: Building | 60,000 |
| Motor vehicles | 69,250 |
| Plant & machinery | 40,000 |
| Sales returns | 3,600 |
| Purchase returns | 4,100 |
| Sales | 700,000 |
| Purchases | 400,000 |
| Sales discounts | 5,000 |
| Purchase discounts | 3,500 |
| Opening inventory | 52,000 |
| 7% Preference shares | 50,000 |
| Provision for bad debts | 2,000 |
| Trade receivables | 26,700 |
| Trade payable | 43,200 |
| Administrative expenses | 18,000 |
| Staff training cost | 4,000 |
| Bad debts | 12,500 |
| Motor expenses | 27,000 |
| Rental | 90,000 |
| Bank overdraft | 15,400 |
| Wages and salaries | 115,000 |
| Debenture interest | 6,000 |
| Suspense account | 200 |
Required:
Prepare the trial balance as at 31 December 2019.
[15 marks]
Question 4
After you have prepared the trial balance for Question 3, you notice the trial balance cannot be balance due to following errors:
- Cash payment of RM500 for stationery was completely omitted from the books.
- Discount received of RM2,000 was debited to discount allowed account.
- Sales of RM3,800 to Molly was not recorded in her account.
- RM1,000 for upkeep of motor vehicle was debited to motor vehicle account. No depreciation has yet to be provided.
Required:
- Prepare the Suspense Account. [5 marks]
- Prepare the adjusted Trial Balance. [5 marks]
Question 5
Using the trial balance prepared in Question 4, prepare the Statement of Comprehensive Income as at 31 December 2019 for ABC Sdn Bhd.
The following information is relevant:
The closing inventory was RM47,000. [20 marks]
Question 6
Using the trial balance prepared in Question 4 and Statement of Comprehensive Income prepared in Question 5, prepare the Statement of Financial Position as at 31 December 2019 for ABC Sdn Bhd.
[20 marks]
Reference ID: #getanswers2001176