Fabrika Enterprise (FE) is a retail business which sells fabric. FE uses a perpetual inventory system. FE has a financial year ending on 31 May. As at 28 February 2019, the ledger of FE shows the following accounts with normal balances: RM RM Cash 15,870 Sales 115,166 Accounts Receivable 16,970 Sales Returns and Allowances 1,030 Merchandise Inventory 22,300 Cost of Goods Sold 66,220 Supplies 310 Freight-out 1,096 Furnitures 35,550 Sales Discount 450 Accumulated Depreciation – Furniture 7,940 Salaries Expense 11,950 Accounts Payable 3,600 Advertising Expense 2,000 Notes Payable 10,000 Utilities Expense 3,000 Capital 41,860 Miscellaneous Expense 1,300 Withdrawal 520 During Mac 2019, the following transactions occurred: March 1 Paid RM3,000 for 3 month promotion cost (March, April, May 2019). 2 Purchased merchandise on account from Pembekal Jakelia for RM7,200, F.O.B shipping point, terms 2/10, n/30. Paid RM350 for shipping charges. 4 Sold merchandise for cash RM2,400. The cost merchandise of sold was RM1,440. 5 Returned defective merchandise purchased from Pembekal Jakelia on 2 March for RM200. 8 Purchased merchandise for cash from Syarikat De’Moda for RM1,500. The owner used his own vehicle to transport the goods purchased to the business premise. Cost of fuel and tolls of RM45 were paid from the business’s petty cash account. 10 Paid Pembekal Jakelia for the amount due for the 2 March purchase. 12 Sold merchandise on account to Persatuan Belia Bangi for RM6,400 under credit terms of 2/10, n/30. The cost of merchandise sold was RM3,200. Shipping charges was RM120, F.O.B Shipping Point. 14 Granted an allowance of RM50 to Persatuan Belia Bangi for defective fabric sold on 12 March. The cost of merchandise sold was RM25. 18 Received cash payment from Persatuan Belia Bangi for the amount due for the 12 March sale. 19 Purchased merchandise on account from Pembekal Kain Kasturi for RM8,400, credit terms 2/10, n/30. Shipping charges was RM150, F.O.B. Destination. 26 Sold merchandise to Cahaya Collections for RM12,400. Cahaya Collections paid RM5,000 and the remaining balance on account under the credit terms of n/30. Paid RM160 for shipping charges with delivery terms F.O.B. Destination. The cost of merchandise sold was RM6,490. 27 Granted Cahaya Collections RM400 credit for defective merchandise returned. The cost of merchandise was RM160. Prior to the preparation of financial statements for the year ended 31 March 2019, the adjustment information are as follows: A physical count of merchandise inventory on 31 March 2019 indicates that the actual inventories are understated by RM500 from the balance of the Merchandise Inventory account. Supplies on hand are RM180. Annual depreciation on furniture totalled RM4,266. The long-term notes payable, signed on 28 February 2019 bears interest rate of 6% per annum. Employee salary for the month of March was RM4500. The payment of the salaries is to be made on 1 April 2019. Promotion cost incurred for the month of March was RM1,000. March utility bills of RM600 received but not yet paid. Received deposit of RM1,200 from customer, Hanis Tailor. The deposit has not been recorded. Required: a. Journalize the March transactions. b. Prepare the adjusting entries on 31 March 2019. c. Prepare a Comprehensive Income Statement for the year ended 31 March 2019.
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.
Fabrika Enterprise (FE) is a retail business which sells fabric. FE uses a perpetual inventory system. FE has a financial year ending on 31 May. As at 28 February 2019, the ledger of FE shows the following accounts with normal balances:
|
RM |
RM |
||
|
Cash |
15,870 |
Sales |
115,166 |
|
|
16,970 |
Sales Returns and Allowances |
1,030 |
|
Merchandise Inventory |
22,300 |
Cost of Goods Sold |
66,220 |
|
Supplies |
310 |
Freight-out |
1,096 |
|
Furnitures |
35,550 |
Sales Discount |
450 |
|
|
7,940 |
Salaries Expense |
11,950 |
|
Accounts Payable |
3,600 |
Advertising Expense |
2,000 |
|
Notes Payable |
10,000 |
Utilities Expense |
3,000 |
|
Capital |
41,860 |
Miscellaneous Expense |
1,300 |
|
Withdrawal |
520 |
During Mac 2019, the following transactions occurred:
|
March 1 |
Paid RM3,000 for 3 month promotion cost (March, April, May 2019). |
|
2 |
Purchased merchandise on account from Pembekal Jakelia for RM7,200, F.O.B shipping point, terms 2/10, n/30. Paid RM350 for shipping charges. |
|
4 |
Sold merchandise for cash RM2,400. The cost merchandise of sold was RM1,440. |
|
5 |
Returned defective merchandise purchased from Pembekal Jakelia on 2 March for RM200. |
|
8 |
Purchased merchandise for cash from Syarikat De’Moda for RM1,500. The owner used his own vehicle to transport the goods purchased to the business premise. Cost of fuel and tolls of RM45 were paid from the business’s petty cash account. |
|
10 |
Paid Pembekal Jakelia for the amount due for the 2 March purchase. |
|
12 |
Sold merchandise on account to Persatuan Belia Bangi for RM6,400 under credit terms of 2/10, n/30. The cost of merchandise sold was RM3,200. Shipping charges was RM120, F.O.B Shipping Point. |
|
14 |
Granted an allowance of RM50 to Persatuan Belia Bangi for defective fabric sold on 12 March. The cost of merchandise sold was RM25. |
|
18 |
Received cash payment from Persatuan Belia Bangi for the amount due for the 12 March sale. |
|
19 |
Purchased merchandise on account from Pembekal Kain Kasturi for RM8,400, credit terms 2/10, n/30. Shipping charges was RM150, F.O.B. Destination. |
|
26 |
Sold merchandise to Cahaya Collections for RM12,400. Cahaya Collections paid RM5,000 and the remaining balance on account under the credit terms of n/30. Paid RM160 for shipping charges with delivery terms F.O.B. Destination. The cost of merchandise sold was RM6,490. |
|
27 |
Granted Cahaya Collections RM400 credit for defective merchandise returned. The cost of merchandise was RM160. |
Prior to the preparation of financial statements for the year ended 31 March 2019, the adjustment information are as follows:
- A physical count of merchandise inventory on 31 March 2019 indicates that the actual inventories are understated by RM500 from the balance of the Merchandise Inventory account.
- Supplies on hand are RM180.
- Annual depreciation on furniture totalled RM4,266.
- The long-term notes payable, signed on 28 February 2019 bears interest rate of 6% per annum.
- Employee salary for the month of March was RM4500. The payment of the salaries is to be made on 1 April 2019.
- Promotion cost incurred for the month of March was RM1,000.
- March utility bills of RM600 received but not yet paid.
- Received deposit of RM1,200 from customer, Hanis Tailor. The deposit has not been recorded.
Required:
a. Journalize the March transactions.
b. Prepare the
c. Prepare a Comprehensive Income Statement for the year ended 31 March 2019.
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