BKAR1013 FINANCIAL ACCOUNTING AND REPORTING I (A201)

MINI CASE 2:
CHAPTER 2 AND 3

DUE DATE: 7 November 2020, Saturday

Guidelines for submission:

1) Please answer all questions.

2) Please write your name, matric number, nu. Position in class, group on the header and
page number on the bottom of your answer document.

3) The mini case is an individual task, however discussion is allowed, but copying other
student’s answer is forbidden.

4) Your answer should be handwritten and subsequently scanned with a scanner or

mobile scanner apps in a combined PDF file. The scanned document must be clear,
easily readable and complete. Photo is not allowed.

5) Submit your scanned answer via Online Learning portal → within

the allotted time and period, before 12.00 mid night, 7 November 2020 (MYT). Only
one submission will be accepted.

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PART A
TRUE-FALSE STATEMENTS

1. An account is often referred to as a T-account because of the way it is constructed.

2. A debit to an account indicates an increase in that account.

3. A new account is opened for each transaction entered into by a business firm.

4. If a revenue account is credited, the revenue account is increased.

5. Debit and credit can be interpreted to mean increase and decrease, respectively.

6. The recording process becomes more efficient and informative if all transactions are
recorded in one account.

7. A credit balance in a liability account indicates that an error in recording has occurred.

8. Revenues are a subdivision of owner's capital.

9. Under the double-entry system, revenues must always equal expenses.

10. Transactions are entered in the ledger first and then they are analyzed in terms of their
effect on the accounts.

11. Business documents can provide evidence that a transaction has occurred.

12. Each transaction must be analyzed in terms of its effect on the accounts before it can be
recorded in a journal.

13. Transactions are entered in the ledger accounts and then transferred to journals.

14. A simple journal entry requires only one debit to an account and one credit to an account.

15. A journal is also known as a book of original entry.

16. Posting is the process of proving the equality of debits and credits in the trial balance.
17. A trial balance does not prove that all transactions have been recorded or that the ledger
is correct.

18. The double-entry system is a logical method for recording transactions and results in
equal debits and credits for each transaction.

19. The normal balance of an expense is a credit.

20. The primary purpose of a trial balance is to prove the mathematical equality of the debits
and credits after posting.

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PART B
QUESTION 1
Karya Berjaya Bhd is a telecommunication company. Below is a list of account balances of
the company at 31 December 2019.
Accounts RM
A Account receivables 45,691
Accounts payable 15,390
Accumulated depreciation – buildings 10,500
Accumulated depreciation - equipment 4,915
Allowance for doubtful debts 300
B Bonds payable 250,750
Buildings 571,950
Bad debt expense 300
C Cost of goods sold 356,730
Cash 547,610
D Depreciation expense – building 3,240
Depreciation expense – equipment 2,500
E Equipment 210,000
G Gain on sale of land 45,650
Gain on revaluation of properties 12,350
Goodwill 25,115
I Inventory 229,979
L Land held for future use 67,000
M Maintenance and repair expenses 4,980
N Notes payable 81,000
O Office expense 4,809
P Property tax expense 700
Prepaid insurance 110,222
R Rent revenue 24,000
Retained earnings 380,300
Reserve 352,250
S Sales revenue 934,675
Sales discounts 2,100
Sales returns and allowance 490
Salaries and wages expenses 10,556
Sales commissions 760
Share capital 115,402
T Travel expense (salesperson) 300
Translation of foreign operations (gain) 2,450

Additional information:
1. 25% of the notes payable are due next year.
2. On 30 December, Karya Berjaya Bhd receives cash advances of RM5,500 from Rasa
Indah Resort. Karya Berjaya Bhd is required to provide services relating to internet

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 access surrounding the Rasa Indah Resort on February 2020. However, the transaction
was not recorded by the accountant.
3. Karya Berjaya Bhd returns defect cables bought from supplier. The cost of the cables
is RM1,500. In return, the company receives full cash refund. The accountant has not
done any adjustment to the relevant accounts.
4. Income tax expense for 2019 is RM34,900.
5. 70% of the bonds payable will be due on 2020. The remaining balance will be due on
June 2020.
6. No dividend has been declared.

REQUIRED:
a. Prepare a Statement of Profit or Loss and Other Comprehensive Income for Karya Berjaya
Bhd for the year ended 31 December 2019 according to MFRS 101 Presentation of
Financial Statements.

b. Prepare a Statement of Financial Position for Karya Berjaya Bhd as at 31 December

2019 according to MFRS 101 Presentation of Financial Statements.

QUESTION 2
Below is an unadjusted trial balance of Jaya Trading Bhd at 31 December 2019.

Accounts Debit (RM) Credit (RM)

Land 766,800  
Buildings 1,372,680  
Equipment 504,000  
Accumulated depreciation – buildings   137,268
Accumulated depreciation - equipment   252,000
Patent 60,276  
Inventory 551,950  
Accounts receivable 109,658  
Prepaid insurance 48,000  
Cash 1,314,264  
Share capital   878,765
Revaluation reserve   560,640
Translation of foreign operations reserve   263,160
Retained earnings   912,720
Deferred tax liability   21,600
Notes payable   194,400
Accounts payable   36,936

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 Sales revenue   2,238,180
Rent revenue   57,600
Gain on revaluation of properties   29,640
Gain on sale of land   109,560
Gain on translation of foreign operations   5,880
Cost of goods sold 856,152  
Sales returns and allowance 1,176  
Salaries and wages expenses 25,334  
Office expense 14,086  
Maintenance and repair expenses 11,953  
Property tax expense 1,680  
Income tax expense 60,340  
  5,698,349 5,698,349

Additional information:
1. Salaries and wages of RM18,000 are accrued and unpaid at 31 December 2019.
2. A tenant of an office space has not yet pay a rental for December 2019 amounting
RM3,000 and this transaction has not yet been recorded.
3. The company returned defect merchandise bought from supplier and was refunded
RM3,500 in cash. The company use perpetual inventory system and this transaction has
not yet been recorded.
4. The company received RM35,000 in cash from a customer on 30 December 2019 and
recorded as sales revenue. However, the company only managed to supply the
merchandise on 3 January 2020.
5. The balance in the prepaid insurance account represents the cost of a one-year period
insurance policy covering the period from 1 July 2019 to 30 June 2020.
6. Annual depreciation for building and equipment are based on straight line depreciation
basis over a period of 50 years and 10 years respectively with no scrap value.
7. 30% of the notes payable is due next year. The note payable interest rate is 8% per annum.

REQUIRED: (Round-up your answer to the nearest RM)

(a) Journalise the adjusting entries on 31 December 2019. (You may omit the explanation)

(b) Prepare a Statement of Profit or Loss and Other Comprehensive Income for Jaya
Trading Bhd for the year ended 31 December 2019 according to MFRS 101
Presentation of Financial Statements.

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(c) Prepare a Statement of Financial Position for Jaya Trading Bhd as at 31 December
2019 according to MFRS 101 Presentation of Financial Statements.

END OF QUESTIONS