Accounting Answers

Trial balance of GM as at 31 December 2021 Debit(RM) Credit(RM)

Sales 126,500

Purchases 99,850

Premises (cost) 100,000

Accumulated depreciation at 1 January 2021_Premises 25,000

Plant (cost) 18,000

Accumulated depreciation at 1 January 2021_Plant 2,300

Wages and salaries 8,900

Rent expense 7,500

Closing inventories RM12,500.

Capital at 1 January 2021 80,000

Drawings 25,000

Carriage inwards 4,000

Account receivables and Account payables 27,500 16,000

Bad debts written off 5,000

Other revenue 2,000

Cash at bank 18,950

Bank loan 30,000

300,750 300,750

Additional information at 31 December 2021:

i.Wages and salaries accrued amount to RM700.

ii. Rent prepaid amounts to RM300.

iii. Bank loan interest of 10 per cent per annum is outstanding.

iv. Provision for doubtful debt for account receivables of 2 per cent is to be made.

v.  Depreciation is to be charged at 2 per cent of cost on the premises and 10 per cent of cost on the plant.

prepare journals for adjusting entries of additional information i, ii, iii, iv.

Explain FIVE consequences of incorporation (10 Marks)

- State & Explain the importance of ALL the clauses found in the Memorandum of Association (10 Marks)

- What is your understanding of Constructive Notice (5 Marks)

The decision in Salomon Vs Salomon & Co Ltd gave rise to the Salomon Principle.

a. Explain FIVE exceptions to this principle under statutory provisions (10 Marks)

b. Explain FIVE exceptions to this principle under case law (10 Marks

The following are the accounts’ balances of GM. at the end of December 2021.

Trial balance of GM as at 31 December 2021 Debit(RM)  Credit (RM)

Sales 126,500

Purchases 99,850

Premises (cost) 100,000

Accumulated depreciation at 1 January 2021_Premises 25,000

Plant (cost) 18,000

Accumulated depreciation at 1 January 2021_Plant 2,300

Wages and salaries 8,900

Rent expense 7,500

Inventories at 1 January 2021 5,000

Capital at 1 January 2021 80,000

Drawings 25,000

Carriage inwards 4,000

Account receivables and Account payables 27,500 16,000

Bad debts written off 5,000

Other revenue 2,000

Cash at bank 18,950

Bank loan 30,000

300,750 300,750

Additional information as at 31 December 2021:

i.       Closing inventories is RM12,500.

ii.     Wages and salaries accrued amount to RM700.

iii.   Rent prepaid amounts to RM300.

iv.   Bank loan interest of 10 per cent per annum is outstanding.

You are required to prepare the following for GM:

a)   Statement of Comprehensive Income for the year ended 31 December 2021.

Is it possible to convert a close coperation into a company? If so, how should thet do it?

Using the formula Qs=100+5P, compute for the quantity supplied of a product at P0

The following are the accounts’ balances of GM. at the end of December 2021.

Trial balance of GM as at 31 December 2021 Debit(RM)  Credit (RM)

Sales 126,500

Purchases 99,850

Premises (cost) 100,000

Accumulated depreciation at 1 January 2021_Premises 25,000

Plant (cost) 18,000

Accumulated depreciation at 1 January 2021_Plant 2,300

Wages and salaries 8,900

Rent expense 7,500

Inventories at 1 January 2021 5,000

Capital at 1 January 2021 80,000

Drawings 25,000

Carriage inwards 4,000

Account receivables and Account payables 27,500 16,000

Bad debts written off 5,000

Other revenue 2,000

Cash at bank 18,950

Bank loan 30,000

300,750 300,750

Additional information as at 31 December 2021:

i.       Closing inventories is RM12,500.

ii.     Wages and salaries accrued amount to RM700.

iii.   Rent prepaid amounts to RM300.

iv.   Bank loan interest of 10 per cent per annum is outstanding.

You are required to prepare the following for GM:

c)    Statement of Financial Position as at 31 December 2021.

Liam is struggling to determine which deprecation method he should use for his new silk-screening machine. He expects sales to increase over the next five years. He also expects (hopes) that in two years he will need to buy a second silk-screening machine to keep up with the demand for products of his growing company. Discuss which depreciation method makes more sense for Liam:

• Higher expenses in the first few years, or keeping expenses consistent over time?
• Or would it be better for him to not think in terms of time, but rather in the usage of the machine?
• Please explain your choice.

You own a farm and grow seasonal products such as pumpkins, squash, and pears. Most of your business revenues are earned during the months of October to December. The rest of your year supports the growing process, where revenues are minimal, and expenses are high. In order to cover the expenses from January to September, you consider borrowing a short-term note from a bank for $300,000. Based on this scenario, please complete the following:

• Research the lending practices of a local bank.
• Determine the interest rate charged for a $300,000 loan.
• Determine the collateral the bank requires to secure the loan?
• Determine your overall payback amount if you were to repay the loan in less than one year.
• Choose either a payback with periodic payments or all at the end of the loan term, and compare the
• outcomes.
• After conducting your research, would you consider borrowing the money?
• What positive and negative outcomes accompany borrowing the money?

(I) Distinguish the difference between the following concepts in relation to company accounting 

(a) Bonus issue and Rights issues 

(b) Loan stock or Bonds

(c) Preference shares and Ordinary shares

(d) Redeemable and Irredeemable

(e) Reserves and Provisions

(f) Unlimited and limited liability

(g) Share capital and Share premium 

(II) Briefly explain the advantages and disadvantages of Bonus and rights issue