QUASCAPE CENTRE Trial Balance as at 31 December 2020 Accounts Titles Dr. (RM) Cr. (RM) Capital 250,000 Motor vehicles 120,000 Fixtures and fittings 80,000 Accumulated depreciation: Motor vehicles 40,000 Fixtures and fittings 20,000 Water and electricity 10,200 Bad debts 11,600 Inventory (1 January 2020) 31,000 Discount received 4,200 Purchases 80,000 Sales 120,000 Cash 16,000 Bank 48,000 Salaries 20,200 Accounts receivable 37,400 Accounts payable 21,500 Drawings 1,300 Total 455,700 455,700 The following information is available to use in making adjusting entries: 1. Closing inventory at 31 December 2020 RM 70,000. 2. Water and electricity bill amounting to RM 500 still remained unpaid. 3. Interest revenue amounting to RM 1,400 has not yet been received. 4. Depreciation expense for motor vehicles RM 20,000 and fixtures and fittings RM 3,000. 5. The owner took out RM 3,000 cash for his personal use. Prepare Statement of Financial Position as at 31 December 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.
|
Accounts Titles |
Dr. (RM) |
Cr. (RM) |
|
Capital |
250,000 |
|
|
Motor vehicles |
120,000 |
|
|
Fixtures and fittings |
80,000 |
|
|
|
||
|
Motor vehicles |
40,000 |
|
|
Fixtures and fittings |
20,000 |
|
|
Water and electricity |
10,200 |
|
|
|
11,600 |
|
|
Inventory (1 January 2020) |
31,000 |
|
|
Discount received |
4,200 |
|
|
Purchases |
80,000 |
|
|
Sales |
120,000 |
|
|
Cash |
16,000 |
|
|
Bank |
48,000 |
|
|
Salaries |
20,200 |
|
|
|
37,400 |
|
|
Accounts payable |
21,500 |
|
|
Drawings |
1,300 |
|
|
Total |
455,700 |
455,700 |
The following information is available to use in making
1. Closing inventory at 31 December 2020 RM 70,000.
2. Water and electricity bill amounting to RM 500 still remained unpaid.
3. Interest revenue amounting to RM 1,400 has not yet been received.
4. Depreciation expense for motor vehicles RM 20,000 and fixtures and fittings RM 3,000.
5. The owner took out RM 3,000 cash for his personal use.
Prepare Statement of Financial Position as at 31 December 2020.
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