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Academic Session 2022 January 2022 Semester

ASSIGNMENT

BBM205/03 Basic Accounting

INSTRUCTIONS TO CANDIDATES: 1. This assignment is the alternative assessment to replace the proctored examination.

2. You are required to answer All questions in this assignment.

3. You are allowed a maximum of one (1) attempt to submit your assignment.

4. The assignment will be made available from 21st March 2022, Monday (00:00) until 6th April 2022, Wednesday (23:59).

5. Completed assignment must be submitted by 6th April 2022, Wednesday (23:59).

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Answer ALL questions below. Question 1 Describe the five (5) basic components of financial statements. (15 marks) Question 2 The following information is available to reconcile Linear Sportwear’s book balance of bank with its bank statement cash balance as of November 30. The November 30 bank balance according to the accounting records is RM78,356, and the bank statement cash balance for that date is RM83,525.

i. The bank erroneously cleared a RM480 cheque against the account in November that was not issued by Linear. The cheque documentation included with the bank statement indicates the cheque was actually issued by Lighthouse Electrical.

ii. On 30 November, the bank issued a credit memorandum for RM53 interest earned on Linear’s account.

iii. When the November cheques are compared with entries in the accounting records, it is found that cheque No. 1828 had been correctly drawn for RM1,530 to pay for advertising but was erroneously entered in the accounting records as RM1,350.

iv. A credit memorandum indicates that the bank collected RM10,000 cash on a note receivable for Linear, deducted a RM30 collection fee, and credited the balance to the company’s Bank account. Linear did not record this transaction before receiving the statement.

v. A debit memorandum of RM895 is enclosed with the bank statement for an NSF check for RM870 received from a customer. The bank assessed a RM25 fee for processing it.

vi. Linear’s 30 November daily cash receipts of RM5,102 were placed in the bank’s night depository on that date, but do not appear on the 30 November bank statement.

vii. Linear’s 30 November cash disbursements journal indicates that cheque No. 1837 for RM584 and cheque No. 1840 for RM1,219 were both written and entered in the accounting records, but are not among the canceled cheques.

Required: a. Prepare the bank reconciliation for this company as of 30 November.

(10 marks) b. Prepare the journal entries necessary to bring the company’s book balance of

cash into conformity with the reconciled cash balance as of 30 November. (5 marks)

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Question 3 On 30 September, Emerald Travel has RM540,250 of accounts receivable. Emerald uses the allowance method of accounting for bad debts and has an existing credit balance in the allowance for doubtful debts accounts of RM13,750. The following information is related to the transaction in October:

• Sold RM325,000 of merchandise (that cost RM178,500) to customers on credit.

• Received RM425,100 cash in payment of accounts receivable.

• Wrote off RM16,700 of uncollectible accounts receivable.

• In adjusting the accounts on 31 October, its fiscal year-end, the company estimated that 3.0% of accounts receivable will be uncollectible.

Required:

a. Prepare journal entries to record the above selected October transactions. The company uses the perpetual inventory system. (10 marks)

b. Show the amount to be debited to the statement of comprehensive accounts and how Accounts Receivable and the Allowance/Provision for Doubtful debts appear on its 31 October statement of financial position. (5 marks)

Question 4 Prepare the year end adjusting journal entries for the following transactions in the

GENERAL JOURNAL. Narratives are required.

a. Depreciation on equipment at cost of RM450,000 and accumulated depreciation

of RM25,000 is charged at 10% per annum with reducing balance method.

(3 marks)

b. Office furniture at cost of RM200,000 is expected to be used for 10 years with

salvage value of RM3,000. (3 marks)

c. As at 31 December, commission income received in advance is amounting to

RM2,500. (3 marks)

d. Travelling expense accrued for RM300. (3 marks)

e. The owner of the business withdrew RM1,400 cash from the office. (3 marks)

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Question 5 The following trial balance was taken from the books of Dumbo Trading at 31 December 2021.

Dumbo Trading

Trial Balance as at 31 December 2021

RM RM

Capital

131,789

Drawings 227,836

Cash and bank 30,380

Sales

1,472,940

Purchases 760,760

Accounts receivable 162,400

Accounts payable

98,700

Inventory 65,870

Carriage outwards 7,805

Carriage inwards 5,880

Returns inwards 34,300

Returns outwards

26,040

Salaries and wages 292,600

Sundry expenses 2,230

Rent (10 months) 47,600

Motor vehicle expenses 6,380

Accumulated depreciation-Fixtures and fittings

1,596

Accumulated depreciation-Motor vehicle

20,160

Fixtures and fittings 6,384

Motor vehicle 100,800

Total 1,751,225

1,751,225

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Additional information:

• Inventory as at 31 December 2021 amounted to RM79,030.

• Dumbo Trading is still owing rent expense for November to December 2021 which

has not been amended in the book.

• The depreciation for fixture and fittings is charged at 25% per annum calculated at

monthly basis using the straight-line depreciation method.

• The depreciation for motor vehicle is charged at 20% per annum calculated at

monthly basis using the reducing balance method.

• Out of RM3,000 salary and wages, RM500 should be sundry expenses and RM2,500 should be motor vehicle expenses respectively. These have yet to be adjusted. Required:

a) Prepare the Statement of Comprehensive Income for the year ended 31 December 2021. (22 marks)

b) Prepare the Statement of Financial Position as at 31 December 2021. (18 marks)

END OF QUESTION PAPER

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