5. The following trial balance was extracted from the books of Fasuha Trading as at 31 December 2020. Particulars Debit Credit RM RM Office equipment 12,250 9,150 3,600 Motor vehicles Furniture Accumulated depreciation as at 1 January 2020: Office equipment Motor vehicles Furniture 2,450 1,373 1,060 3,632 29,608 Account receivables and account payables Capital 6% loan to Rara 6,860 2,500 19,110 31,560 215 Purchases and sales Discount 175 Advertising Cash in hand 4,250 1,630 Provision for doubtful debts 300 Commission received 6% loan from Afina Bank (taken from 1 May 2020) Rent Drawings Maintenance and petrol Staff's wages Insurance Cash at bank Carriage inwards Carriage outwards Telephone and electricity Duties on purchases 740 8,000 700 1,200 1,900 1,260 4,005 1,000 5,270 210 250 610 915 Returns 110 112 Inventory as at 1 January 2020 TOTAL 3,415 79,710 79,710
5. The following trial balance was extracted from the books of Fasuha Trading as at 31 December 2020. Particulars Debit Credit RM RM Office equipment 12,250 9,150 3,600 Motor vehicles Furniture Accumulated depreciation as at 1 January 2020: Office equipment Motor vehicles Furniture 2,450 1,373 1,060 3,632 29,608 Account receivables and account payables Capital 6% loan to Rara 6,860 2,500 19,110 31,560 215 Purchases and sales Discount 175 Advertising Cash in hand 4,250 1,630 Provision for doubtful debts 300 Commission received 6% loan from Afina Bank (taken from 1 May 2020) Rent Drawings Maintenance and petrol Staff's wages Insurance Cash at bank Carriage inwards Carriage outwards Telephone and electricity Duties on purchases 740 8,000 700 1,200 1,900 1,260 4,005 1,000 5,270 210 250 610 915 Returns 110 112 Inventory as at 1 January 2020 TOTAL 3,415 79,710 79,710
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
Transcribed Image Text:5. The following trial balance was extracted from the books of Fasuha Trading as at 31
December 2020.
Particulars
Debit
Credit
RM
RM
Office equipment
Motor vehicles
12,250
9,150
3,600
Furniture
Accumulated depreciation as at 1 January 2020:
Office equipment
2,450
1,373
1,060
3,632
29,608
Motor vehicles
Furniture
Account receivables and account payables
Сapital
6% loan to Rara
6,860
2,500
19,110 31,560
215
4,250
1,630
Purchases and sales
Discount
175
Advertising
Cash in hand
Provision for doubtful debts
300
740
Commission received
6% loan from Afina Bank (taken from 1 May 2020)
8,000
700
1,200
1,900
1,260
4,005
1,000
5,270
210
Rent
Drawings
Maintenance and petrol
Staff's wages
Insurance
Cash at bank
Carriage inwards
Carriage outwards
Telephone and electricity
Duties on purchases
250
610
915
110
3,415
79,710 79,710
Returns
112
Inventory as at 1 January 2020
ТОTAL
The following adjustment are to be taken into account:
a. Inventory as at 31 December 2020 was valued at RM2,600
b. The interest on the loan taken from Afina bank was not recorded in the accounts.
c. Prepaid RM300 of the insurance premiums
d. Prepaid RM125 of the telephone and electricity bills.
e. Depreciation was provided using the rates as follows:
i. Office equipment
ii. Motor vehicles
iii. Furniture
f. Bad debts of RM110 to be written off
20% p.a on carrying value
15% p.a on cost
10% p.a on cost
g. The provision for doubtful debts was to be adjusted to 2.5% of the remaining
account receivables
h. Fasuha had drawn RM150 cash from the business to spend on his son's birthday.
Required:
a) Prepare the Statement Profit or Loss and Other Comprehensive Income for the
year ended 31 December 2020.
b) Prepare the Statement of Financial Position as at 31 December 2020
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