Presented below is the trial balance for Akshara Bunga Bhd (ABB) as at 31 December 2020: Accounts Debit (RM) Credit (RM) Land 156,250 Office building 193,750 Equipment 25,000 Motor vehicle 68,750 Accumulated depreciation: - Office building - Equipment - Motor vehicle 65,000 10,000 26,250
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.
Presented below is the
|
Accounts |
Debit (RM) |
Credit (RM) |
|
Land |
156,250 |
|
|
Office building |
193,750 |
|
|
Equipment |
25,000 |
|
|
Motor vehicle |
68,750 |
|
|
- Office building - Equipment - Motor vehicle |
|
65,000 10,000 26,250 |
|
Bank |
137,500 |
|
|
Trade receivables |
172,500 |
|
|
Supplies |
18,750 |
|
|
Prepaid insurance |
38,250 |
|
|
Long term investment |
201,875 |
|
|
|
50,000 |
|
|
Inventory |
56,500 |
|
|
Ordinary share capital |
|
375,000 |
|
Reserves |
|
25,000 |
|
|
|
206,250 |
|
Rent revenue |
|
71,875 |
|
Sales |
|
675,000 |
|
Gain on revaluation of properties |
|
11,250 |
|
Gain on sale of land |
|
12,500 |
|
Gain on translation of foreign operations |
|
6,250 |
|
Cost of goods sold |
280,000 |
|
|
Salary and wages expenses |
142,500 |
|
|
Finance cost |
25,000 |
|
|
Distribution expenses |
25,625 |
|
|
Advertising expenses |
15,625 |
|
|
Other operating expenses |
15,000 |
|
|
Income tax expense |
17,750 |
|
|
Notes payable |
|
100,000 |
|
Dividend payable |
|
18,750 |
|
Trade payables |
|
12,500 |
|
Unearned revenue |
|
25,000 |
|
|
1,640,625 |
1,640,625 |
Additional information:
- No depreciation has been charged for the year. The company policy is to charge a full year’s depreciation on all assets held at the year-end at the following rates:
Office Building - 4% per annum on cost
Equipment -5% per annum on cost
Motor vehicle – 10% per annum on cost
- Commission to salesmen is paid on net income for 2020 are announced to be RM62,500. The annual payment will be made on 1 March 2021.
- A note payable of RM100,000 was issued on 1 December 2020 at 9% per year. Interest is paid quarterly. The transaction has been recorded except for accrued interest. 25% of the notes are due next year.
- It is estimated that the provision for doubtful debts for the year is RM5,000.
- At the end of the year 2020, RM6,250 of unearned revenue was earned. The revenue earned has not been recorded.
- Supplies expenses for the year are RM10,000 and have not been recorded.
- On 28 December 2020 the company purchased merchandise on account at a price of RM15,000. The transaction has not been recorded as at 31 December 2020.
REQUIRED:
- Prepare a
Statement of Financial Position for ABB as at 31 December 2020 according to MFRS 101 Presentation of Financial Statements.
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