The following balances were extracted from the books of TopWatch Sdn Bhd for the year ended 31 December 2021.   Dr (RM) Cr (RM) Land 500,000   Building 200,000   Motor vehicles 120,000   Plant and machinery 70,000   Retained profit as at 1.1.2021   312,150 8% debenture   150,000 Ordinary share   230,000 Acc depreciation as at 1.1.2021 :     -Building   60,000 -Motor Vehicles   69,250 -Plant & Machinery   40,000 Returns 3,600 4,100 Revenue   700,000 Purchases 400,000   Discounts 5,000 3,500 Carriage inwards 7,700   Carriage outwards 8,000   Opening inventory 52,000   7% Preference shares   50,000 Provision for bad debts   2,000 Trade receivables / Trade payable 66,000 43,200 General reserve   25,000 Advertising 18,000   Staff training cost 4,000   Bad debts 12,500   Motor expenses 27,000   Rental 90,000   Bank   7,600 Wages and salaries 115,000   Proceed from sale of motor vehicles   8,000 Debenture interest 6,000     1,704,800 1,704,800       Additional information: i. Closing inventory at 31 December 2021 was valued at RM65,000. This excluded the following items:    > Product A, which had cost RM3,000 to produce and had a net realisable value of RM2,900 and    > Product B, which was partly completed. This had incurred costs to date of RM900 and it is estimated that it will require a further RM500 to complete. ii. In December 2021, the company sent goods on a sale or return basis to one of their customers. These goods were included, at their sales value, in the revenue figure in the trial balance. These goods had a cost price of RM8,000 and it is the policy of the company to add a margin of 20% to these types of goods. As at 31 December 2021 the customer had not agreed to buy these goods. iii. One of its customers, Antrim Sdn Bhd, who owed RM4,000, was declared bankrupt. This is to be written off. iv. The provision for bad debts should be 4% of trade receivables. v. In December 2021, the company got the land professionally valued at RM600,000. The company has decided to include this valuation in their financial statement. vi. Rent prepaid during the period was RM8,000 at the end of the year. vii. The proceeds for sale of a motor vehicle, in the trial balance, relates to the disposal, is of a motor vehicle that was purchased for RM12,000 during 2019. viii. Depreciation is to be charged as follows: -Buildings 2% on cost -Plant and machinery 20% on cost -Vehicles 25% reducing balance Full year’s depreciation is charged in the year of purchase and none in the year of sale. ix. Provide for the debenture interest and preference dividend outstanding at year end. x. During January 2021, the company realised that the closing inventory at 31 December 2020 was understated by RM7,700. Required: In accordance to MFRS 101 Presentation of Financial Statements (as amended). a) Prepare the Statement of Comprehensive Income for the year ended 31 December 2021 (Show workings where appropriate). b) Prepare the Statement of Financial Position for the year ended 31 December 2021 (Show workings where appropriate)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The following balances were extracted from the books of TopWatch Sdn Bhd for the year ended 31 December 2021.

  Dr (RM) Cr (RM)
Land 500,000  
Building 200,000  
Motor vehicles 120,000  
Plant and machinery 70,000  
Retained profit as at 1.1.2021   312,150
8% debenture   150,000
Ordinary share   230,000
Acc depreciation as at 1.1.2021 :    
-Building   60,000
-Motor Vehicles   69,250
-Plant & Machinery   40,000
Returns 3,600 4,100
Revenue   700,000
Purchases 400,000  
Discounts 5,000 3,500
Carriage inwards 7,700  
Carriage outwards 8,000  
Opening inventory 52,000  
7% Preference shares   50,000
Provision for bad debts   2,000
Trade receivables / Trade payable 66,000 43,200
General reserve   25,000
Advertising 18,000  
Staff training cost 4,000  
Bad debts 12,500  
Motor expenses 27,000  
Rental 90,000  
Bank   7,600
Wages and salaries 115,000  
Proceed from sale of motor vehicles   8,000
Debenture interest 6,000  
  1,704,800 1,704,800
     

Additional information:
i. Closing inventory at 31 December 2021 was valued at RM65,000. This excluded the following items:
   > Product A, which had cost RM3,000 to produce and had a net realisable value of RM2,900 and
   > Product B, which was partly completed. This had incurred costs to date of RM900 and it is estimated that it will require a further RM500 to complete.

ii. In December 2021, the company sent goods on a sale or return basis to one of their customers. These goods were included, at their sales value, in the revenue figure in the trial balance. These goods had a cost price of RM8,000 and it is the policy of the company to add a margin of 20% to these types of goods. As at 31 December 2021 the customer had not agreed to buy these goods.
iii. One of its customers, Antrim Sdn Bhd, who owed RM4,000, was declared bankrupt. This is to be written off.
iv. The provision for bad debts should be 4% of trade receivables.
v. In December 2021, the company got the land professionally valued at RM600,000. The company has decided to include this valuation in their financial statement.
vi. Rent prepaid during the period was RM8,000 at the end of the year.
vii. The proceeds for sale of a motor vehicle, in the trial balance, relates to the disposal, is of a motor vehicle that was purchased for RM12,000 during 2019.
viii. Depreciation is to be charged as follows:
-Buildings 2% on cost
-Plant and machinery 20% on cost
-Vehicles 25% reducing balance
Full year’s depreciation is charged in the year of purchase and none in the year of sale.
ix. Provide for the debenture interest and preference dividend outstanding at year end.
x. During January 2021, the company realised that the closing inventory at 31 December 2020 was understated by RM7,700.


Required:
In accordance to MFRS 101 Presentation of Financial Statements (as amended).

a) Prepare the Statement of Comprehensive Income for the year ended 31 December 2021 (Show workings where appropriate).

b) Prepare the Statement of Financial Position for the year ended 31 December 2021 (Show workings where appropriate)

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1) as per information viii - the depreciation for Vehicles 25% "reducing balance", not on cost.

2) vi. Rent prepaid during the period was RM8,000 at the end of the year. Since there is prepatment for rental, why there is no prepayment reflect in statement of financial position?

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