Question 1 You have been provided with the following trial balance of Mayflower Sdn Bhd as at 31 July 20X8: Trial Balance of Mayflower Sdn Bhd as at 31 July 20X9 Debit Credit RM RM 120,000 Ordinary shares of RM1 each 120,000 General reserve 47,000 Retained profit as at 1 August 20x7 27,000 Freehold land, at cost 180,000 Motor vehicle, at cost 60,000 Accumulated depreciation of motor vehicles 25,000 Debenture 8% 20,000 Gross profit 127,500 Carriage outwards 3,000 Salaries 26,000 Insurance 6,000 Water and electricity 4,300 Advertisement 5,000 Directors’ remuneration 12,000 General Expenses 3,500 Audit fees 2,500 Interim dividend 12,000 Closing inventory 30,000 Trade receivable 22,000 Trade payable 18,000 Cash at bank 17,000 Cash in hand 1,200 384,500 384,500 The following information for the year ended 31 July 20x8 was extracted from books of Mayflower Sdn Bhd: 1. Accrued general expenses amounted to RM200. 2. Unpaid debenture interest amounted to RM1,600. 3. Insurance amounting to RM1,500 is for the yea r ended 31 July 20x9. 4. Motor vehicle is depreciated 15% per annum on cost. 5. The tax expense is expected to be RM21,160. 6. The directors proposed the following: (i) Transfer RM5,000 to general reserves (ii) A final dividend of 10 sen per share is to be paid to ordinary shareholder. Required: (a) Prepare the Statement of Profit or Loss and an extract of the Statement of Changes in Equity (showing the movements in retained earnings) of Mayflower Sdn Bhd for the year ended 31 July 20x8. (b) Prepare the Statement of Financial Position of Mayflower Sdn Bhd as at 31 July 20x8. (c) Name TWO (2) types of shares. Briefly explain ant Three (3) differences between these two types of shares.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Question 1
You have been provided with the following
Bhd as at 31 July 20X8:
Trial Balance of Mayflower Sdn Bhd as at 31 July 20X9
Debit Credit
RM RM
120,000 Ordinary shares of RM1 each 120,000
General reserve 47,000
Retained profit as at 1 August 20x7 27,000
Freehold land, at cost 180,000
Motor vehicle, at cost 60,000
Debenture 8% 20,000
Gross profit 127,500
Carriage outwards 3,000
Salaries 26,000
Insurance 6,000
Water and electricity 4,300
Advertisement 5,000
Directors’ remuneration 12,000
General Expenses 3,500
Audit fees 2,500
Interim dividend 12,000
Closing inventory 30,000
Trade receivable 22,000
Trade payable 18,000
Cash at bank 17,000
Cash in hand 1,200
384,500 384,500
The following information for the year ended 31 July 20x8 was extracted from
books of Mayflower Sdn Bhd:
1. Accrued general expenses amounted to RM200.
2. Unpaid debenture interest amounted to RM1,600.
3. Insurance amounting to RM1,500 is for the yea r ended 31 July 20x9.
4. Motor vehicle is
5. The tax expense is expected to be RM21,160.
6. The directors proposed the following:
(i) Transfer RM5,000 to general reserves
(ii) A final dividend of 10 sen per share is to be paid to ordinary
shareholder.
Required:
(a) Prepare the Statement of Profit or Loss and an extract of the Statement of
Changes in Equity (showing the movements in
Mayflower Sdn Bhd for the year ended 31 July 20x8.
(b) Prepare the Statement of Financial Position of Mayflower Sdn Bhd as at 31
July 20x8.
(c) Name TWO (2) types of shares. Briefly explain ant Three (3) differences
between these two types of shares.
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