Mr. Ahmad Ali, who runs a retail business, Teguh Harian Ltd, had the following balances extracted from the books of the business on 30 June 2020: Account Name RM RM Account Receivable and Account Payable 165,520 72,440 Carriage inwards 3,520 Inventory as at 1 July 2019 65,980 Carriage outwards 4,360 Discount allowed and discount received 2,680 60 Utilities 25,100 Loan from Miko bank 80,000 Returns inwards and return outwards 3,840 3,580 Bank 10,400 Premises 160,000 Motor Vehicles 56,000 Furniture and fittings 27,600 Cash 2,160 Accumulated depreciation as at 1 July 2019 ∙ Motor vehicles 20,160 ∙ Furniture and fittings 8,280 Salaries and wages 68,600 Bad debts 2,940 Rent received 7,500 Printing and stationery 9,400 Drawings 3,560 Insurance expenses 18,200 Purchases and Sales 592,380 844,300 Allowance for doubtful debts 5,920 Capital as at 1 July 2019 180,000 1,222,240 1,222,240 Additional information as at 30 June 2020: [Maklumat tambahan berikut pada 30 Jun 2020:] (i) Provision for depreciation are to be provided based on the following. [Peruntukan susut nilai disediakan berdasarkan pada perkara berikut.] ∙ Motor vehicles 20% on book value, yearly basis [Kenderaan bermotor] [20% atas nilai buku, kadar tahunan] ∙ Furniture and fittings 10% on cost, yearly basis [Lekapan dan lengkapan] [10% atas kos, kadar tahunan] (ii) A portion of the business premises was rented out for RM1,500 month starting from 1 March 2020. [Sebahagian daripada premis perniagaan disewa dengan harga RM1,500 sebulan mulai 1 Mac 2020.] (iii) A debtor, Tan was declare a bankrupt in January 2020. The amount owed by him amounting to RM2,720 has not been adjusted yet. [Seorang penghutang, Tan diisytiharkan muflis pada Januari 2020. Jumlah yang terhutang kepadanya berjumlah RM2,720 belum diselaraskan.] (iv) A debtor Azam, paid RM740 in cash for his debt which has been written off two years ago. [Seorang penghutang Azam, membayar wang tunai RM740 untuk hutangnya yang telah dihapuskan dua tahun sebelum.] (v) It is the policy of the firm to provide 5% provision of doubtful debts on the outstanding account receivable. [Adalah menjadi dasar syarikat untuk memberikan peruntukan hutang ragu 5% atas hutang tertunggak.] (vi) Miko bank approved the loan in January 2020 and charged interest at the rate of 8% per annum thereon. [Miko Bank meluluskan pinjaman pada Januari 2020 dan dikenakan faedah pada kadar 8% setahun di atasnya.] (vii) The amount of insurance premium paid is for a coverage period of 13 month starting from February 2020. [Jumlah premium insurans yang dibayar adalah untuk tempoh perlindungan selama 13 bulan bermula dari Februari 2020.] (viii) The expenses below are still outstanding as at year end. [Perbelanjaan di bawah masih belum selesai pada akhir tahun.] ∙ Salaries and wages RM4,690 [Gaji dan upah] ∙ Utilities RM710 [Utiliti] (ix) The owner had consumed some goods worth RM12,680 and withdrew RM1,000 cash for personal use. [Pemilik telah menggunakan sejumlah barang bernilai RM12,680 dan mengeluarkan wang tunai RM1,000 untuk kegunaan peribadi.] (x) Inventory as at 30 June 2020 was RM69,900. [Inventori pada 30 Jun 2020 adalah RM69,900.] Required: [Dikehendaki:] a) Prepare Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 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.
Mr. Ahmad Ali, who runs a retail business, Teguh Harian Ltd, had the following balances extracted from the books of the business on 30 June 2020:
|
Account Name |
RM |
RM |
|
|
165,520 |
72,440 |
|
Carriage inwards |
3,520 |
|
|
Inventory as at 1 July 2019 |
65,980 |
|
|
Carriage outwards |
4,360 |
|
|
Discount allowed and discount received |
2,680 |
60 |
|
Utilities |
25,100 |
|
|
Loan from Miko bank |
|
80,000 |
|
Returns inwards and return outwards |
3,840 |
3,580 |
|
Bank |
10,400 |
|
|
Premises |
160,000 |
|
|
Motor Vehicles |
56,000 |
|
|
Furniture and fittings |
27,600 |
|
|
Cash |
2,160 |
|
|
|
|
|
|
∙ Motor vehicles |
|
20,160 |
|
∙ Furniture and fittings |
|
8,280 |
|
Salaries and wages |
68,600 |
|
|
|
2,940 |
|
|
Rent received |
|
7,500 |
|
Printing and stationery |
9,400 |
|
|
Drawings |
3,560 |
|
|
Insurance expenses |
18,200 |
|
|
Purchases and Sales |
592,380 |
844,300 |
|
Allowance for doubtful debts |
|
5,920 |
|
Capital as at 1 July 2019 |
|
180,000 |
|
|
1,222,240 |
1,222,240 |
Additional information as at 30 June 2020:
[Maklumat tambahan berikut pada 30 Jun 2020:]
(i) Provision for depreciation are to be provided based on the following. [Peruntukan susut nilai disediakan berdasarkan pada perkara berikut.]
∙ Motor vehicles 20% on book value, yearly basis
[Kenderaan bermotor] [20% atas nilai buku, kadar tahunan]
∙ Furniture and fittings 10% on cost, yearly basis
[Lekapan dan lengkapan] [10% atas kos, kadar tahunan]
(ii) A portion of the business premises was rented out for RM1,500 month starting from 1 March 2020.
[Sebahagian daripada premis perniagaan disewa dengan harga RM1,500 sebulan mulai 1 Mac 2020.]
(iii) A debtor, Tan was declare a bankrupt in January 2020. The amount owed by him amounting to RM2,720 has not been adjusted yet.
[Seorang penghutang, Tan diisytiharkan muflis pada Januari 2020. Jumlah yang terhutang kepadanya berjumlah RM2,720 belum diselaraskan.]
(iv) A debtor Azam, paid RM740 in cash for his debt which has been written off two years ago.
[Seorang penghutang Azam, membayar wang tunai RM740 untuk hutangnya yang telah dihapuskan dua tahun sebelum.]
(v) It is the policy of the firm to provide 5% provision of doubtful debts on the outstanding account receivable.
[Adalah menjadi dasar syarikat untuk memberikan peruntukan hutang ragu 5% atas hutang tertunggak.]
(vi) Miko bank approved the loan in January 2020 and charged interest at the rate of 8% per annum thereon.
[Miko Bank meluluskan pinjaman pada Januari 2020 dan dikenakan faedah pada kadar 8% setahun di atasnya.]
(vii) The amount of insurance premium paid is for a coverage period of 13 month starting from February 2020.
[Jumlah premium insurans yang dibayar adalah untuk tempoh perlindungan selama 13 bulan bermula dari Februari 2020.]
(viii) The expenses below are still outstanding as at year end.
[Perbelanjaan di bawah masih belum selesai pada akhir tahun.]
∙ Salaries and wages RM4,690
[Gaji dan upah]
∙ Utilities RM710
[Utiliti]
(ix) The owner had consumed some goods worth RM12,680 and withdrew RM1,000 cash for personal use.
[Pemilik telah menggunakan sejumlah barang bernilai RM12,680 dan mengeluarkan wang tunai RM1,000 untuk kegunaan peribadi.]
(x) Inventory as at 30 June 2020 was RM69,900.
[Inventori pada 30 Jun 2020 adalah RM69,900.]
Required:
[Dikehendaki:]
- a) Prepare Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020.
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