At 31 January 2020 the following trial balance was extracted from the books of Yusiti. Particulars Debit RM Credit RM Capital 1 February 2019 101,430 Vehicles at cost 35,000 Equipment at cost 80,000 Purchases and sales 284,680 503,520 Provision for depreciation at 1 February 2019: Vehicles Equipment 21,000 35,000 Return inward and return outwards 1,340 650 Finance expenses 1,220 Stock at 1 February 2019 25,570 Vehicles expenses 4,930 Rent, rates and insurance 7,420 Office expenses 21,940 Drawings 23,550 Petty cash 200 Wages and salaries 95,370 Bad debts 1,240 Debtors and creditors 83,210 18,950 Cash at bank 14,880 TOTAL 680,550 680,550 Additional information as at 31 January 2020: No. Particulars RM i. Stock valued at 29,750 ii. Insurance prepaid 340 iii. Goods taken from stock for own use 420 iv. Wages due 2,400 v. Provision for doubtful debt required 620 vi. Provision for depreciation is to be provided as follows: Vehicles - straight line method Equipment - reducing balance method 30% 25% Required: a) Statement Profit or Loss and Other Comprehensive Income for the year ended 31 January 2020.
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.
- At 31 January 2020 the following
trial balance was extracted from the books of Yusiti.
Particulars |
Debit RM |
Credit RM |
Capital 1 February 2019 |
101,430 |
|
Vehicles at cost |
35,000 |
|
Equipment at cost |
80,000 |
|
Purchases and sales |
284,680 |
503,520 |
Provision for Equipment |
21,000 35,000 |
|
Return inward and return outwards |
1,340 |
650 |
Finance expenses |
1,220 |
|
Stock at 1 February 2019 |
25,570 |
|
Vehicles expenses |
4,930 |
|
Rent, rates and insurance |
7,420 |
|
Office expenses |
21,940 |
|
Drawings |
23,550 |
|
Petty cash |
200 |
|
Wages and salaries |
95,370 |
|
|
1,240 |
|
Debtors and creditors |
83,210 |
18,950 |
Cash at bank |
14,880 |
|
TOTAL |
680,550 |
680,550 |
Additional information as at 31 January 2020:
No. |
Particulars |
RM |
i. |
Stock valued at |
29,750 |
ii. |
Insurance prepaid |
340 |
iii. |
Goods taken from stock for own use |
420 |
iv. |
Wages due |
2,400 |
v. |
Provision for doubtful debt required |
620 |
vi. |
Provision for depreciation is to be provided as follows: Vehicles - Equipment - |
30% 25% |
Required:
- a) Statement Profit or Loss and Other Comprehensive Income for the year ended 31 January 2020.
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