Aneka Trading is a sundry shop business owned by Mr. Aqil The following trial balance for his business as at 31 December 2020 was extracted from his books. Aneka Trading Trial Balance as at 31 December 2020 Accounts Debit (RM) Credit (RM) Inventory on 1 January 2020 45,000 Cash 5,950 Bank 11,500 Accounts receivable 26,000 Allowance for doubtful debts 500 Accounts payable 22,250 Capital 70,000 Motor Vehicle 100,000 Office Equipment 30,000 Accumulated Depreciation – Motor vehicle 40,000 Accumulated Depreciation – office equipment 7,500 Sales 330,000 Return inwards 3,000 Purchases 240,000 Return outwards 2,000 Carriage inwards 3,400 Carriage outwards 1,500 Drawings 3,600 Discount allowed 2,200 Discount received 4,600 Utilities expenses 3,800 Insurance expenses 7,900 Bad debts expenses 750 Selling expenses 8,800 Interest on loan 1,250 Wages and salaries 27,000 Rental received 14,000 Long term loan, 8% p.a 30,800 Total 521,650 521,650 Additional information: Inventory as at 31 December 2020 was RM38,000. Included in the insurance expense was a general insurance amounting to RM600 which was for the next accounting period. Interest on bank loan for half a year was unpaid. One of the accounts receivables was declared a bankrupt. The amount owing to Aneka Trading was RM3,000. Utilities expenses for December 2020 amounting to RM1,600 have not been included in the accounts. The owner took out cash amounting worth RM300 for personal dinner celebration with his family. Allowance for doubtful debts is to be adjusted to 5% of net account receivables. Depreciation is to be charged as follow: Office Equipment 25% on reducing balance method Motor Vehicles 20% on straight line method Required: Prepare an Income Statement for the year ended 31st December 2020. Prepare the Statement of Financial Position as at 31st December 2020.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Question 2
Aneka Trading is a sundry shop business owned by Mr. Aqil The following
Aneka Trading
Trial Balance as at 31 December 2020
|
Accounts |
Debit (RM) |
Credit (RM) |
|
Inventory on 1 January 2020 |
45,000 |
|
|
Cash |
5,950 |
|
|
Bank |
11,500 |
|
|
|
26,000 |
|
|
Allowance for doubtful debts |
500 |
|
|
Accounts payable |
22,250 |
|
|
Capital |
70,000 |
|
|
Motor Vehicle |
100,000 |
|
|
Office Equipment |
30,000 |
|
|
|
40,000 |
|
|
Accumulated Depreciation – office equipment |
7,500 |
|
|
Sales |
330,000 |
|
|
Return inwards |
3,000 |
|
|
Purchases |
240,000 |
|
|
Return outwards |
2,000 |
|
|
Carriage inwards |
3,400 |
|
|
Carriage outwards |
1,500 |
|
|
Drawings |
3,600 |
|
|
Discount allowed |
2,200 |
|
|
Discount received |
4,600 |
|
|
Utilities expenses |
3,800 |
|
|
Insurance expenses |
7,900 |
|
|
|
750 |
|
|
Selling expenses |
8,800 |
|
|
Interest on loan |
1,250 |
|
|
Wages and salaries |
27,000 |
|
|
Rental received |
14,000 |
|
|
Long term loan, 8% p.a |
30,800 |
|
|
Total |
521,650 |
521,650 |
Additional information:
- Inventory as at 31 December 2020 was RM38,000.
- Included in the insurance expense was a general insurance amounting to RM600 which was for the next accounting period.
- Interest on bank loan for half a year was unpaid.
- One of the accounts receivables was declared a bankrupt. The amount owing to Aneka Trading was RM3,000.
- Utilities expenses for December 2020 amounting to RM1,600 have not been included in the accounts.
- The owner took out cash amounting worth RM300 for personal dinner celebration with his family.
- Allowance for doubtful debts is to be adjusted to 5% of net account receivables.
- Depreciation is to be charged as follow:
- Office Equipment 25% on
reducing balance method - Motor Vehicles 20% on
straight line method
Required:
- Prepare an Income Statement for the year ended 31st December 2020.
- Prepare the
Statement of Financial Position as at 31st December 2020.
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