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
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.
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 |
|
|
Accumulated |
||
|
∙ 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:
(i) Provision for depreciation are to be provided based on the following.
∙ Motor vehicles 20% on book value, yearly basis
∙ Furniture and fittings 10% on cost, yearly basis
(ii) A portion of the business premises was rented out for RM1,500 month starting from 1 March 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.
(iv) A debtor Azam, paid RM740 in cash for his debt which has been written off two years ago.
(v) It is the policy of the firm to provide 5% provision of doubtful debts on the outstanding account receivable.
(vi) Miko bank approved the loan in January 2020 and charged interest at the rate of 8% per annum thereon.
(vii) The amount of insurance premium paid is for a coverage period of 13 month starting from February 2020.
(viii) The expenses below are still outstanding as at year end.
∙ Salaries and wages RM4,690
∙ Utilities RM710
(ix) The owner had consumed some goods worth RM12,680 and withdrew RM1,000 cash for personal use.
(x) Inventory as at 30 June 2020 was RM69,900.
Required:
- a) Prepare Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2020.
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