The trial balance below was extracted from the books of CiciCaca Enterprise as at 31 Mac 2020: Particulars Debit RM Credit RM Purchases and Sales 377,000 950,000 Plant and machinery 432,000 Vehicles 102,000 Land and building 625,000 Accumulated depreciation: Plant and machinery Vehicles 175,000 39,000 Discount allowed and discount received 1,500 760 Returns inwards and returns outwards 44,000 12,200 Carriage inwards 4,700 Carriage outwards 5,500 Custom duties 15,400 Drawings 3,600 Provision for doubtful debts 2,000 Salaries and wages 300,000 Electricity and water 65,000 Rent and rates 4,000 Insurance 55,000 Mortgage on land and building 450,000 Repairs and maintenance 6,300 Commission earned 95,000 Accounts receivables 187,000 Account payable 166,500 Inventory – 1 April 2019 51,000 Cash at bank 41,100 Capital 429,640 TOTAL 2,320,100 2,320,100 The following additional information is to be taken into consideration: Increase in provision for doubtful debts to RM3,610 Depreciation for the year: Plant and machinery - RM25,700 Vehicles - RM15,300 Accrued expenses: Rent and rates - RM1,000 Electricity and water - RM4,800 Expenses paid in advance: Salaries and wages - RM4,500 Insurance - RM5,000 Inventory on 31 Mac 2020 was RM42,800. Required: Prepare the Statement Profit or Loss and Other Comprehensive Income for the year ended 31 Mac 2020 Prepare the Statement of Financial Position as at 31 Mac 2020
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
- The
trial balance below was extracted from the books of CiciCaca Enterprise as at 31 Mac 2020:
|
Particulars |
Debit RM |
Credit RM |
|
Purchases and Sales |
377,000 |
950,000 |
|
Plant and machinery |
432,000 |
|
|
Vehicles |
102,000 |
|
|
Land and building |
625,000 |
|
|
Accumulated |
|
175,000 39,000 |
|
Discount allowed and discount received |
1,500 |
760 |
|
Returns inwards and returns outwards |
44,000 |
12,200 |
|
Carriage inwards |
4,700 |
|
|
Carriage outwards |
5,500 |
|
|
Custom duties |
15,400 |
|
|
Drawings |
3,600 |
|
|
Provision for doubtful debts |
|
2,000 |
|
Salaries and wages |
300,000 |
|
|
Electricity and water |
65,000 |
|
|
Rent and rates |
4,000 |
|
|
Insurance |
55,000 |
|
|
Mortgage on land and building |
|
450,000 |
|
Repairs and maintenance |
6,300 |
|
|
Commission earned |
|
95,000 |
|
Accounts receivables |
187,000 |
|
|
Account payable |
|
166,500 |
|
Inventory – 1 April 2019 |
51,000 |
|
|
Cash at bank |
41,100 |
|
|
Capital |
|
429,640 |
|
TOTAL |
2,320,100 |
2,320,100 |
The following additional information is to be taken into consideration:
- Increase in provision for doubtful debts to RM3,610
- Depreciation for the year:
- Plant and machinery - RM25,700
- Vehicles - RM15,300
- Accrued expenses:
- Rent and rates - RM1,000
- Electricity and water - RM4,800
- Expenses paid in advance:
- Salaries and wages - RM4,500
- Insurance - RM5,000
- Inventory on 31 Mac 2020 was RM42,800.
Required:
- Prepare the Statement Profit or Loss and Other Comprehensive Income for the year ended 31 Mac 2020
- Prepare the
Statement of Financial Position as at 31 Mac 2020
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