Question 2: The following Trial Balance was extracted from the books of Mr Smith as at 30 December 20X1: Debit Credit RM RM Sales and Purchases 68,080 215,580 Returns 220 380 Inventories as at 1 January 20X1 18,400 Rent received 9,000 Building at cost 520,000 Advertising expenses 27,600 Trade receivables and Trade Payables 168,000 100,000 Salaries and wages 68,000 Motor vehicles at cost 100,000 Insurance 24,000 Sundry expenses 15,000 Accumulated depreciation: Motor vehicles 40,000 Accumulated depreciation: Buildings 64,000 Electricity and water 7,100 Allowance for doubtful debts 1,200 Discounts 3,000 7,000 Printing and stationery 2,496 Cash in hand 136,000 Bank overdraft 736 Capital 720,000 1,157,896 1,157,896 Additional information: 1. Rent received in arrears as at 31 December 20X1 was RM1,000. 2. Insurance includes RM2,000 paid for January and February 20X2. 3. Depreciation charges are to be provided as follows: - Motor vehicles at 10% per annum on net book value - Buildings at the rate of 1% per annum on cost 4. Electricity charges outstanding for the year amounted to RM590. 5. Allowance for doubtful debts is to be increased by RM500. 6. Inventories as 31 December 20X1 was RM6,520. Required: Prepare the Statement of Profit or Loss for the year ended 31 December 20X1 and the Statement of Financial Position for Mr Smith as at that date.
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.
Question 2:
The following
30 December 20X1:
Debit Credit
RM RM
Sales and Purchases 68,080 215,580
Returns 220 380
Inventories as at 1 January 20X1 18,400
Rent received 9,000
Building at cost 520,000
Advertising expenses 27,600
Trade receivables and Trade Payables 168,000 100,000
Salaries and wages 68,000
Motor vehicles at cost 100,000
Insurance 24,000
Sundry expenses 15,000
Accumulated
Accumulated depreciation: Buildings 64,000
Electricity and water 7,100
Allowance for doubtful debts 1,200
Discounts 3,000 7,000
Printing and stationery 2,496
Cash in hand 136,000
Bank overdraft 736
Capital 720,000
1,157,896 1,157,896
Additional information:
1. Rent received in arrears as at 31 December 20X1 was RM1,000.
2. Insurance includes RM2,000 paid for January and February 20X2.
3. Depreciation charges are to be provided as follows:
- Motor vehicles at 10% per annum on net book value
- Buildings at the rate of 1% per annum on cost
4. Electricity charges outstanding for the year amounted to RM590.
5. Allowance for doubtful debts is to be increased by RM500.
6. Inventories as 31 December 20X1 was RM6,520.
Required:
Prepare the Statement of Profit or Loss for the year ended 31 December
20X1 and the
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