Question 5 The following is the Trial Balance of Maple Union Berhad at 31 December 2020. Pls refer to picture attached The following additional information are available: Inventory at 31 December 2020 is valued at RM13,000. Rates and insurance are prepaid by RM1,500. Wages of RM400 is owed. The allowance for doubtful debts is fixed at 4% of trade receivable balances. Bad debts of RM500 are to be written off. Rent of RM400 is due but yet to be paid. Long term loan interest is 10% per annum. Depreciation of motor vehicles and furniture & equipment are based on 15% per annum on cost. Machinery is depreciated at 15% per annum on reducing balance method. The director proposed a final ordinary dividend of 10%. The proposed corporate tax rate is 30%. Required: Prepare: a. The Statement of Comprehensive Income for the year ended 31 December 2020. b. The Statement of Financial Position as at 31 December 2020.
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 5
The following is the
Pls refer to picture attached
The following additional information are available:
- Inventory at 31 December 2020 is valued at RM13,000.
- Rates and insurance are prepaid by RM1,500.
- Wages of RM400 is owed.
- The allowance for doubtful debts is fixed at 4% of trade receivable balances.
Bad debts of RM500 are to be written off. - Rent of RM400 is due but yet to be paid.
- Long term loan interest is 10% per annum.
- Depreciation of motor vehicles and furniture & equipment are based on 15% per annum on cost. Machinery is
depreciated at 15% per annum onreducing balance method . - The director proposed a final ordinary dividend of 10%.
- The proposed corporate tax rate is 30%.
Required:
Prepare:
a. The Statement of Comprehensive Income for the year ended 31 December 2020.
b. The Statement of Financial Position as at 31 December 2020.
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