UNIVERSITI TUNKU ABDUL RAHMAN

FOUNDATION IN ARTS

FHBM 1214
FINANCIAL ACCOUNTING

TUTORIAL WORKBOOK

STUDENT COPY
October 2021 Trimester

Notes for students:

1. Make sure you attempt the tutorial questions before attending tutorial classes to ease class
discussion.
2. Tutor is only required to discuss the main questions and not all questions.
3. Self-study questions are additional exercises for students. You are required to try it yourself.
 Contents Page

Title Page

Tutorial 1: Conceptual Framework……………………………………………………………...2

Tutorial 2: Accounting Equation & Source Documents………………………………………...6

Tutorial 3: Accounts & Double-entry Recording System ……………………………………. 11

Tutorial 4: Books of Original Entry ….………………………………………………………. 15

Tutorial 5: Trial Balance and the Final Accounts …..................................................................20

Tutorial 6: Accounting for Fixed Assets …………………………..………..………..………..32

Tutorial 7: Principles of Internal Checks……………………………...……………………… 37

Tutorial 8: Final Accounts of the Sold Trader ………………………………………….......... 40

Tutorial 9: Final Accounts of the Sold Trader ……………………………………….............. 43

Tutorial 10: Correction of Errors …………………..………………………………………… 47

Tutorial 11: Control Accounts ……………………………………………..………………… 54

Tutorial 12: Bank Reconciliation ……………………..……………………………………… 61

1
Tutorial 1: Conceptual Framework

Question 1
What is accounting? How does it differ from bookkeeping?

Question 2
Identify and explain the characteristics of the different forms of business organizations in Malaysia.

Answer:
Forms Proprietorship Partnership Corporation
Ownership

Liability

Question 3
(a) A trader purchased a machine for RM3,000 cash. The seller stated that the machine was worth
RM3,500 in the market. At which amount should the trader record his new machine?

(b) Why are assets recorded at cost price and not at current values? Give two reasons.

Question 4
Charles operates a laundry business. During the year, he receives RM30,000 for services rendered. His
customers still owe him RM10,000 for services rendered in the same year. The operating expenses paid
and incurred so far amount to RM15,000 while accrued expenses total RM5,000.

(a) Calculate his total revenue and total expenses for the year.

(b) What is his profit for the year?

(c) Which accounting concept is being applied here?

2
Self Study

[Past Year Question: April 2010]

State and explain the accounting concept that was applied in each of the following scenarios:

(i) Mr. Alvin, the owner of Billboard Sdn. Bhd., paid his own house rent from the company’s bank
current account. The accounts clerk had recorded the transaction as a withdrawal.

(ii) Since the first year operation, Sandall Enterprise used the straight line method to report the
depreciation charges for its fixed assets. The business continued with the same method of
depreciation in subsequent years.

(iii) A multinational company worth over RM100 million has purchased an ashtray worth RM20
which can last for 10 years. The company charged the ashtray as an expense in its account in
the year of purchase.

(iv) Fairies Sdn. Bhd. has assets worth RM200,000 in market value. However, the company
recorded the assets using its original purchase price.

[Past Year Question: April 2011]

(a) Users of accounting can be categorized to internal users and external users. List and explain
any TWO (2) users of accounting. Provide an example for decisions made by each user.

3
(b) What is the purpose of accounting?

(c) IT Solutions Sdn. Bhd. sells computers and earned a revenue of RM25,000 in November whilst
operating in a rented office. The company incurred a monthly rental expense of RM1,000 for
the building. Assume that the company normally pays its monthly rental expense in the
following month.

(i) When should IT Solutions Sdn. Bhd. report the RM1,000 rental expense incurred in November?
Explain your answer.

(ii) What is the concept being applied in this situation?

(d) Grand Advertising Sdn. Bhd. provided services to Vincent Enterprise for RM3,000 on credit in
May 2010. Vincent Enterprise promised to settle the payment in the following month instead of
paying cash.

(i) When should Grand Advertising Sdn. Bhd. recognize that transaction as revenue to its
business? Explain your answer.

(ii) What is the concept being applied in this situation?

4
[Past Year Question: April 2012]

(a) Transactions refer to any economic event or activity that affects the financial condition of a
business and must be entered into the accounting records. List and explain the TWO (2) types
of transactions.

(b) Identify the accounting concept that applies in the following situations:

(i) S&J Bhd has applied straight line method to depreciate its fixed assets annually since its
commencement date of business. Such method is required to be practiced continuously in
future accounting years.

(ii) The land purchased by Success Bhd that costs RM1 million in year 1990 has a market value of
RM10 million now. However, Success Bhd is still recording the value of the land in the balance
sheet at the purchased price.

(iii) Susan as the owner of Sunshine Enterprise has withdrawn RM2,000 cash from her business for
her personal use. Such drawings is required to be recorded in the financial statements.

5
Tutorial 2: Accounting Equation & Source Documents

Question 1
The basic accounting equation is ____________ = ___________ + _______________

Question 2
Explain Asset, Liability and Owner Equity and provide example for each.

Question 3
Briefly explain the relationship that is denoting in the accounting equation

Question 4
For each of the transactions below, indicate two (or more) of the effects of these transactions on the
accounting equation of the business (i.e. whether there is an increase (+), a decrease(-) or no effect) and
note the accounts involve. Please take note that each of these transactions does not relate to one
another.

Example: The business purchased furniture using cash.

Asset Liabilities Owner’s Equity

Increase in Furniture account No effect No effect
Decrease in Cash account

a) The owner invested additional cash to the business.

b) The bank has granted a loan to the business and the proceeds has been deposited into the
business’s bank account.
c) Received rent in cash.
d) The company purchased a new building, of which 10% deposit was paid through cheque and the
remainder will be paid through mortgage loan.
e) The owner withdrew some cash from the business for personal use.
f) The company received a cheque from customer as part of the payment on the outstanding amount.
g) Paid for electricity by cheque.

6
h) The business purchased a significant amount of raw materials from its suppliers on credit.
i) A cheque has been drawn out to pay for the owner’s household expenses.
j) Company paid the first installment to the supplier.
k) Owner has brought in his van to the business.
l) Sold goods to KK Shop. Half has been paid by cash and the remaining will be paid through
installments.
m) Owner took out some goods for his house.
Notes:
 The differences between withdrawals of cash/bank with goods/stocks.
Cash/Bank (+ in Drawings, - cash/bank)
Goods/Stock (+ in Drawings, - Purchases)
 Sales/Purchase on credit is referring to postpone the payment that cause the
debtor/creditor account opened.
 Purchase of raw materials/stocks/goods will be recorded in purchases account.

Answer:

Asset Liabilities Owner’s Equity

a
b
c
d
e
f
g
h
i
j
k
l
m

7
Self-Study

Question 1

For each transaction, show the effects on the accounting equation.

(a) Received cash from the proprietor as an additional investment in the business, RM10,000.
(b) Paid cash to Sunshine Company Ltd for the amount owed RM1,850.
(c) Paid for purchase of office furniture with cheque RM3,800.
(d) Received cheque RM1,400 from Mrs Maxwell, a customer, for amount owes.
(e) Repaid loan to the bank by writing a cheque for RM15,000 to the bank.
(f) Paid a 10% deposit to Sany Machines by cheque for the purchased of machinery costing
RM12,000 with the balance to be paid in installments.
(g) Sold goods on credit to Mall & Co, RM9,600
(h) Paid cheque RM780 for rental of premises.
(i) Proprietor transferred cash RM5,500 from personal account to business account.

Answer:

A = L + OE
RM RM RM
(a)
(b)
(c)

(d)

(e)
(f)

(g)
(h)
(i)
Total 18270 (6050) 24320

Question 2
8
 Dandy started operations as a retailer on 1 August 2005. Show the effects on the accounting equation
for the following transactions.

2005 RM
Aug 1 Commenced business operations by contributing the following assets and
liabilities:
Cash in hand RM500; bank RM9,000; premises RM50,000
4 Purchased office supplies on credit from Jurong Suppliers 4,500
8 Cash sales paid directly into the bank 1,600
15 Bank account of business charged with RM360 interest on bank services.
18 Cash refund of RM50 given for goods previously sold for cash
23 Sold goods on credit to James 1,945
25 Paid into the bank cash RM5,000 as additional capital
30 Purchased new furniture worth RM3,000. Payment made by cheque.

Answer:

2005 A = L + OE
RM RM RM
Aug 1

4
8
15
18
23
25
30

Total 72,135 4,500 67,635

Question 3

Identify the source documents involved in each of the following situations:

(a) Document issued by the seller when customer is being overcharged.

(b) Document issued by the seller when customer is being undercharged.

(c) Document sent by the seller to inform the charge on the goods supplied on credit.

Question 4

9
Owner’s equity is defined as the rights of the owner and has ownership claim on the total assets of the
business. Commonly, changes in capital, drawings, revenues and expenses accounts have a direct
effect with the total of the owner’s equity. Explain the effect of these accounts on the owner’s equity
total.

[Past Year Question: April 2010]

Provide THREE (3) purposes of having source documents.

[Past Year Question: April 2011]

All accounting entries are based on the information derived from source documents. Whenever a
transaction has taken place, the details must be recorded for recording purposes. List any THREE (3)
sources of documents.

[Past Year Question: April 2012]

Briefly explain the following source documents.

(i) Invoice
(ii) Credit note
(iii) Debit note
(iv) Receipt
(v) Payment voucher

Tutorial 3: Account & Double-entry Recording System

Question 1
10
For each of the accounts below, identify the Category of the accounts to either it is Asset, Liability,
Owner’s Equity, Expenses or Revenue. Subsequently, indicate whether you will “Debit” or “Credit” the
account in order to increase its’ balance and to decrease its’ balance.

Accounts Accounts Category To increase balance To decrease balance

Debtors
Creditors
Bank
Cash in Hand
Sales of Goods
Drawings
Return Inwards
Return Outwards
Land
Capital
Motor Vehicles
Administration expense
Service Revenue
Repairs expense

Question 2
For each of the transactions below, draw up the T-accounts to show its double entry and do monthly
closing. Please take note that each of these transactions does not relate to one another.

*Notes:
Closing date-at the end of the each month
Write “balance c/d” for asset, liability and owner’s equity
Write “SOCI” (Statement of Comprehensive Income) for revenue and expenses

i) Jan 15 Made cash sales of RM7,000

ii) Feb 2 Served client and received cash RM400
iii) Mar 10 Buy new furniture of RM1,400 and pay by cheque.
iv) Apr 5 Ali commences his business by contributing cash RM25,000 and a delivery van worth
RM58,000
v) Jan 15 Purchase of goods intended for resale on credit from MC Supplies Sdn Bhd amounting
to RM62,000
vi) Aug 28 Pay house rent using company’s cheque for RM1,200
vii) Oct 10 Regular customer, Bajie Bhd purchased goods amounting to RM2,400. Half of it has
been paid by cash and the remaining half is on credit.
viii) May 1 The owner Wendy brings in a cheque of RM5,000 as an additional investment into the
business.

Eg. : Answers

(i) Jan 15 Made cash sales of RM7,000.

11
 Cash acc Sales acc
+, Dt +, Cr

Cash Acc
Jan 15 Sales RM7,500 Jan 31 Balance c/d RM7,500

Sales Acc
Jan 31 SOCI RM7,500 Jan 15 Cash RM7,500

ii) Feb 2 Served client and received cash RM400

iii) Mar 10 Buy new furniture of RM1,400 and pay by cheque.

iv) Apr 5 Ali commences his business by contributing cash RM25,000 and a delivery van
worth RM58,000.

v) Jan 15 Purchase of goods intended for resale on credit from MC Supplies Sdn. Bhd.
amounting to RM62,000.

vi) Aug 28 Pay house rent using company’s cheque for RM1,200

12
vii) Oct 10 Regular customer, Bajie Bhd purchased goods amounting to RM2,400. Half of it
has been paid by cash and the remaining half is on credit.

viii) May 1 The owner Wendy brings in a cheque of RM5,000 as an additional investment
into the business.

Self Study
[Past Year Question: April 2007]
13
 Mr. Sam opened an electrical appliance store on 1 July 2005 by contributing RM20,000 cash into the
bank and a motor vehicle worth RM6,000. The following transactions took place during July 2005.

2005 RM
July 2 Obtained a loan from Morgan Bank. 50,000

10 Purchased goods on credit from West Manufacturers. 20,000

15 Sold goods on credit to Raju for RM12,100. Of total sales,

RM500 were cash sales (paid by cheque) and RM11,600
were credit sales.

18 Returned damaged goods to West Manufacturers. 1,400

22 Bought two computers from AC Supplies Sdn Bhd. A

deposit of RM1,000 was paid by cheque, the balance of
RM4,000 to be paid over two months.

25 Paid wife’s expenses account at J Store by cheque. 770

31 Paid wages by cheque. 2,500

Required:

Enter the above transactions in double-entry form in the general ledger and determine the balance of all
accounts at the end of the year.

Tutorial 4: Books of Original Entry

14
Question 1
Joe, a sole proprietor, recently started a grocery store business. His daughter has recorded the following
transactions for January 2019, their first month of business. Journalize these transactions and post the
entries to their appropriate ledger accounts. Narrations are not required.

January
3 Joe opened a bank account and deposited RM10,000 to start his business.
4 He brought into his business an old van valued at RM4,300.
5 Supplies of groceries worth RM 3,800 were purchased from Lim Wholesale on credit to stock
up his store.
17 Joe drew out groceries worth RM50 for private use.
26 Joe bought furniture for office use from Ideal Furniture Co on credit, value was RM300.

Answer:

Date Particulars Dr. Cr.

Bank A/C Capital A/C Vehicle-Van A/C Purchases

Creditor - Lim
Wholesale Drawings Furniture Creditor - Ideal Furniture Co
 
       

Question 2

15
Dr. Fared has been practicing as a cardiologist for three years. During April, Dr. Fared completed the
following transactions in his practice of cardiology:

Apr 1 Paid office rent by cheque for April, RM800.

3 Purchased equipment on account, RM2,100.
5 Received cash from patients on account, RM3,150.
8 Purchased medicine equipment on account, RM5,245.
12 Paid cash to creditors on account, RM1,250.
17 Paid cash for renewal of a six-month property insurance policy, RM370.
20 Paid cash for laboratory analysis, RM545.
24 Paid cash from business bank account for personal and family expenses, RM1,250.
27 Received professional fees from patients, RM1,720
30 Paid salaries of receptionist and nurses, RM1,725.
30 Paid various utility expenses, RM360.
30 Fees charged to patients on account for services performed in April, RM5,145

Journalize the above transactions in a general journal.

Answer:
Date Particulars Dr. Cr.
RM RM

Self Study
16
[Past Year Question: April 2010]

State TWO (2) situations in which returns outwards journal and returns inwards journal are being used
respectively.

[Past Year Question: April 2011]

Cash discount is the deduction from the amount due to encourage prompt payment of debts while trade
discount is deduction off the list given by one trader when he sells to another trader. However, the
amount of trade discount given will depend on the situation. Explain TWO (2) situations that would be
the reasons for the buyer to receive a trade discount from the trader.

[Past Year Question: April 2012]

Siti has established a flower store called Flower Inn in Klang Valley. She is requesting your help to
prepare the prime entry for the following transactions (narratives are not required):

(i) On 1 March 2011, Flower Inn purchased 5 dozen roses on credit amounting to RM250 from
Beauty Rose Enterprise.

(ii) On 10 March 2011, Flower Inn sold 1 dozen roses to its customer, Albert Tan and received
cash of RM100.

(iii) On 31 March 2011, Flower Inn has paid a rental of RM400 by cheque for rental for March 2011.

(iv) On 1 April 2011, Flower Inn made payment of RM225 to Beauty Rose Enterprise by cheque for
settling its amount due.

(v) On 1 April 2011, Flower Inn received a discount of RM25 from Beauty Rose Enterprise to
encourage prompt payment.

Answer:

17
 No. Date Particulars Debit Credit

(i)

(ii)

(iii)

(iv)

(v)

[Past Year Question: September 2017]

Mr. Mark started his advertising business on 1 July 2016. You as an accountant for this company are
responsible to record all the business transactions as follows:

(i) On 1 July 2016, he invested RM20,000 into the business bank account. Due to shortage
of cash as startup capital, he borrowed RM10,000 from Moybank and the loan proceeds
were deposited into the business bank account directly.

(ii) On 2 July 2016, the company paid RM500 for stamp duty fees to Inland Revenue
Board for the rental agreement.

(iii) On 3 July 2016, he purchased a printing machine from ReckoTrading for RM15,000 by
paying a 20% down payment by cheque and the remaining amount to be settled in 90
days.

(iv) On 15 July 2016, the company billed Eng Enterprise for RM2,000 and Dingli Sdn.
Bhd. for RM5,000.

(v) On 31 July 2016, the company made payment for rental RM1,500, salary RM1,500 and
electricity RM1,000. All payments were in cash.

Required:

Journalize the above transactions in the general journal. (Narratives are not required).

Answer:

18
(a)
Date Particulars Debit (RM) Credit (RM)
(i)

(ii)

(iii)

(iv)

(v)

19
Tutorial 5: Trial Balance and The Final Accounts

Notes:
“Inwards” = cost of goods sold (Trading)
Without inwards=expenses (P&L)
Office supplies –Current asset

Question 1
Following is the balance of Jeevan Company on 31 December 201 6.
RM
General expenses 2,025
Discount received 1,370
Salaries 9,287
Traveling expense 1,430
Discount allowed 400
Capital 60,820
Drawings 6,500
Premises 40,000
Furniture 5,000
Stock on 1st January 15,000
Cash at bank 4,650
Purchases 66,235
Sales 94,000
Carriage inwards 2,100
Electricity 1,350
Sundry debtors 16,000
Sundry creditors 15,421
Bank charges 134
Rent 1,500

Stock as on December 31, 2016 is valued at RM15,500.

Prepare the trial balance, statement of comprehensive income and statement of financial position for
Jeevan Company.

20
Answer:
Jeevan Company
Trial balance as at 31 December 2016

Statement of Comprehensive income for the year ended 31 December 201 6

Sales
Less: Cost of Goods Sold
Opening Stock
Add: Purchases
Carriage inwards

Less: Closing Stock

Gross Profit
Add: Discount received

Less: Expenses
General expenses
Salaries
Traveling
Discount allowed
Electric
Bank charges
Rent
Net Profit

Statement of Financial position as at 31 December 201 6

Fixed Assets:

21
 Premises
Furniture
Current Assets:
Closing stock
Sundry debtors
Cash at Bank

Financed by:
Capital, 1 Jan 2016
Add Net Profit

Less Drawings

Current Liabilities:
Sundry creditors

Question 2

22
Red Zone Sdn. Bhd. an advertising company prepared the following trial balance at 31 December
2018.

Red Zone Sdn. Bhd.

Trial Balance as at 31 December 2018
      Debit Credit
    RM RM
  Machines   65,000  
  Motor Vehicles   85,000  
  Loan from bank     45,000
  Purchases / Sales   46,700 155,000
  Returns of goods   11,500 2,200
  Office Supplies   6,800  
  Cash   27,000  
  Debtors   17,000  
  Stocks   11,800  
  Creditors     12,150
  Bank Overdraft     3,500
  Capital, 1 Jan     69,000
  Discounts   1,200 700
  Drawings   1,100  
  Maintenance   3,700  
  Insurance on purchases   1,400  
  Freight charges   1,800  
  Salaries   6,300  
  Commissions   2,550 1,300
   
288,850 288,850
         

Closing stock valued was at RM6,200

Required:
a) Prepare the Statement of Comprehensive Income for the year ended 31 December
2018.
b) Prepare the Statement of Financial Position Balance as at 31 December 2018.

Answer:

23
 Red Zone Sdn. Bhd.
Statement of Comprehensive Income the year ended 31 December 2018
RM   RM   RM  

GROSS PROFIT        
           

NET PROFIT        

24
 Red Zone Sdn. Bhd.
Balance Sheet as at 31 December 2018
RM   RM   RM  
Fixed Assets        

Current Assets        

Total Assets        
Financed by,        
Owner's Equity        
 
 
 
 
 
       
Long-Term Liability        

       
Current Liabilities        
 
 
 
       
     
           

Self Study

Question 1
25
From the following list of balances extracted, prepare a Trial Balance as at 31 January 2008.

RM
Cash 1,419
Bank 3,790
Purchases 2,950
Sales 1,783
Return Outwards 72
Return Inwards 25
Capital 10,500
Stationery 89
Rent 220
Salaries 790
Fixtures 610
Van 6,500
Debtors - M Singh 306
Debtors - R Tong 165
Loan from B Barclay 2,500
Creditors - Chiefs Ltd 610
Creditors - T Dry 800
Creditors - G Low 510
Creditors - Buttons Ltd 89

Question 2
The following information relates to the trading activities of Bala during the year ended 30 Sept 2002:
RM

26
 Stock, 1 October 2001 5,400
Stock, 30 September 2002 (cost) 6,700
Revenue from sales 22,500
Return of goods by customer 640
Cost of purchases 16,400
Carriage paid for purchases 535
Return of goods to supplier 880

Draw up the Trading Account for the year ended 30 September 2002 to calculate the gross profit.

Question 3
Complete the Profit and Loss Account for the year ended 31 July 2002 from the following information:
RM
Carriage outwards 440
Rent received from sub tenant 1,200
Advertising expense 250
Wages and salaries 2,160
Sundry expense 195
Gross profit for the year was RM1,780.

Question 4
Queen’s Trading and Profit and Loss Accounts were prepared and the following balances remained in
the ledger on 31 August 2002:

27
 RM
Sundry debtors 11,600
Sundry creditors 9,950
Capital, 1 September 2001 25,000
Drawings 1,500
Motor vehicle 13,400
Cash at bank 4,500
Stock, 31 August 2002 7,800
Office furniture 2,600
Profit and Loss Account 6,450 (credit)

You are required to prepare the Statement of Financial Position as at 31 August 2002.

Question 5

Mr Danny opens a Ding Dong Book Store and closes its accounts on 31 December every
year.The following balances were extracted from the books as at 31 December 2010:
28
 A stock take valued the closing stocks at RM12,000.

Required:

(a) Prepare the Statement of Comprehensive Income for the year ended 31 December
2010.
Answer: GP=43,250, NL=9,490
(b) Prepare the Statement of Financial Position as at 31 December 2010.
Answer: FA=42,000, CA=42,000, OE=53,520, LTL=25,000, CL=5,480

Question 6

An adjusted trial balance of MINE Sdn Bhd as at 31 December 2010 is as follows.

29
 Trial Balance as at 31 December 2010
    RM RM
    Debit Credit
Sales   180,000
Purchases 58900  
Return Inwards and Return Outwards 500 750
Bank 203,000  
Debtors 7950  
Creditors   14,350
Capital   60,000
Interest expense 15000  
Wages 31,000  
Maintenance 12,000  
Equipment 18,000  
Motor vehicles 120,000  
Bank Loan(10%)   245,000
Commission 3,340  
Carriage inwards 1010  
Discount allowed 3400  
Insurance 6,000  
Stock 20,000  
      500,100 500,100

Stock at 31 December 2010 was valued at RM9,500.

Required:

(a) Prepare the Statement of Comprehensive Income for the year ended 31
December 2010.
Answer: GP=109,840, NP=39,100

(b) Prepare the Statement of Financial Position as at 31 December 2010.

Answer: FA=138,000, CA=220,450, OE=99,100, LTL=245,000. CL=14,350

Question 7

The following is the trial balance of Michael Enterprise as at 31 December 2010:

30
 Trial Balance as at 31 December 2010
    RM RM
    Debit Credit
Buildings 200,000  
Motor Vehicles 150,000  
Office Equipment 100,000  
Capital, 1 Jan 2010   305,500
Drawings 17,000  
Stock as at 1 Jan 2010 37,000  
Account Receivables 26,700  
Cash in Bank 51,300  
Cash on Hand 9,900  
Long Term Loan   150,000
Account Payables   47,700
Sales   207,200
Purchases 31,100  
Commission Revenue   7,800
Discount Received   3,900
Discount Allowed 2,800  
Returns Inwards 4,100  
Returns Outwards   2,500
Rent Expense 13,300  
Insurance Expense 24,000  
Interest Expense 12,000  
Utility Expense 15,000  
Salaries 30,400  
      724,600 724,600

Stock as at 31 December 2010 was valued at RM33,300.

Required:

(a) Prepare the Statement of Comprehensive Income for the year ended 31st
December 2010.
Answer: GP=170,800, NP=85,000

(b) Prepare the Statement of Financial Position as at 31st December 2010.

Answer: FA=450,000, CA=121,200, OE=373,500, LTL=150,000, CL=47,700

Tutorial 6: Accounting for Fixed Asset

Question 1
Explain what depreciation is and give reasons why fixed assets lose their value.

31
Question 2
What are the factors businesses need to consider before calculating depreciation and how they affect its
calculation?

Question 3
A firm bought a machine costing RM4,000 on 1 April 2018 and paid for it in cash. Depreciation of 20%
on cost per annum was allowed on the machine. In 2018, the depreciation expense was charged at
RM600. On 31 December 2019, the machine was sold off for RM2,500. The firm closes its account on
December every year. Following is the year-end balance for 2018.

As at 31Decemeber 2018 (RM)

Machine account 4,000
Provision for Depreciation Account 600

You are required to show:

a. The necessary journal entries to record the disposal of the machine.
b. The Machine Account, the Provision for Depreciation Account and the Disposal of Machine
Account for year of 2019.

a. Journal Entries

32
 b. Ledger Entries
    Machinery Account    

    Provision for Depreciation Account  

 
 
 

    Disposal of Machinery Account  

 
 
 
 

Question 4
The books of a business on 1 January 2015 reveal the following balances:
RM
Plant and machinery 10,000
Provision for depreciation on plant and machinery 2,000
Office equipment 1,000
Provision for depreciation on office equipment 360

Assume that the business has bought both the plant and machinery and the office equipment on 1
January 2013, and that the business decides to continue to depreciate the plant and machinery at 10%
per annum on cost and the office equipment at 20% per annum on the diminishing balance method.

You are required to show:

a. Journal entries to provide for depreciation for both these items for the year ended 31December 2015.
b. The provision for depreciation account for plant and machinery in 2015.
c. The provision for depreciation account for office equipment in 2015.

Answer:

a. Journal Entries

33
  

b.   Provision for Depreciation - Plant & Machinery a/c

c.    Provision for Depreciation - Office Equipment a/c  

 

Self Study

Question 1

34
Danny bought a laptop on 1 May 2016 at the cost of RM9,600. The laptop was sold on 30 April 2018 at
the price of RM3,000 and the payment was received by cheque. The net book value of the laptop as at
the disposal date was RM5,760. Danny bought a new laptop two weeks later at the cost of RM10,800 on
credit.

(i) Calculate the loss on the disposal of the laptop. (1 mark)

(ii) Prepare the journal entries for the disposal. (4 marks)

Answer:

(i)

(ii)
Date Particulars DR CR

Question 2
The following shows an extract from Lin’s Statement of Financial Position as of 31 December 2001:

Fixed assets: RM RM
Vehicles 5,600
Less Provision for depreciation 2,016 3,584

Lin allowed the vehicles to be depreciated using the reducing balance method at a rate of 20% per
annum. On 1 January 2002, he bought another vehicle for use in the business. He paid RM7,606 for it
with a cheque drawn on his own personal account. He decided to continue with his policy of
depreciating all his vehicles using the reducing balance method for the year ended 31 December 2002.

You are required to show:

a. The Vehicles Account.
b. The Provision for Depreciation Account.
Balance all ledger accounts and bring down their balances wherever relevant

Answer:
 a.   Vehicle Account    
 
35
  

 b.   Provision for Depreciation - Vehicle a/c  

 
 

[Past Year Question: December 2011]

JD Enterprise produces toys in Klang Valley. The company closes its accounts on 31 December every
year. On 1 July 2008, the company had purchased the following assets:

Asset Unit Costs / unit Payment Depreciation %

Motor Vehicles 3 RM80,000 Cheque 20%
Office Equipment 2 RM5,000 Cash 10%

It is the policy of the company to depreciate its motor vehicles by using reducing balance method and
office equipment by using straight line method.

On 30 June 2009, one of the motor vehicle had been disposed off with a market value of RM50,000.

a) Use the schedule format as given below to calculate the accumulated depreciation and net
book value of office equipment for the year ended 2008, 2009 and 2010.

Accumulated
Year Beginning NBV Depreciation RM Ending NBV(RM)
Depreciation RM

b) Prepare the Disposal of Motor Vehicles Account. Total of depreciation for the disposal machine
as at the disposal date is RM15,200.

Answer:

a).
Accumulated Ending NBV
Year Beginning NBV Depreciation RM
Depreciation RM (RM)

b)
    Disposal Account    

Tutorial 7: Principles of Internal Checks

Question 1
Briefly explain the following terms:
i. Prepaid expenses
36
 ii. Unearned revenue
iii. Accrual expenses
iv. Accrued revenue/Revenue receivables
v. Bad debt
vi. Doubtful debt

Question 2
Ann Enterprise was opened for business since January 2013 and closes its accounts at the end of each
year. The unadjusted accounts balances of Ann Enterprise as at 31 December 2016 are as follows:

Cash 23,000
Accounts receivable 11,500
Office supplies 4,300
Prepaid insurance 6,000
Office equipment 60,000
Accumulated depreciation - office equipment 18,000
Accounts payable 5,530
Notes payable 15,000
Unearned revenue 12,000
Ann, Capital 37,970
Ann, Drawing 6,700
Service revenue 53,000
Wages expense 18,000
Rent expense 5,500
Utility expense 3,900
Maintenance expense 2,100
Bad debts 500

Additional information:
a) Rent expense is RM500 per month. Rent expense for the month of December is still unpaid.
b) Ann Enterprise received RM12,000 at the early month of December for services performed
until end of May 2017. It has been recorded as unearned revenue for the year 2016. The
charges rate for the services is equally distributed among those months.
c) Prepaid insurance represented one-year premiums purchased at April 1, 2016.
d) Fees earned but unbilled to clients as at December 31 are RM4,250.
e) Office Supplies on hand at December 31 are RM1,750.
f) Depreciation of equipment is based on the straight-line method. The equipment has 10 years
estimated life with no scrap value.
g) It was decided to write-off an additional 5% of total debtors as at 31 Dec 2016 as bad debts and
2% as Provision for Doubtful Debts.
Required:
i. Prepare an adjusted trial balance for Ann Enterprise as at 31 December 2016.
ii. Journalize the adjusting entries at 31 December 2016.

Answer:
37
i.)

Ann Enterprise
Adjusted Trial Balance as at 31 December 2016
    Adjustment Debit (RM) Credit (RM)

Cash  

Accounts receivable

Provision for Doubtful Debt

Office supplies

Prepaid insurance

Office equipment

Accumulated depreciation

Accounts payable

Notes payable

Unearned revenue

Capital  

Drawing  

Service revenue

Wages expenses

Rent expenses

Utility expenses

Maintenance Expenses

Accrued rent

Insurance expenses

Supplies expenses

Depreciation expenses

Bad debts

Doubtful debts

   

ii)

Journal Entries:
Debit Credit
            (RM) (RM)

38
Tutorial 8: Final Accounts of the Sole Trader

Question 1
Suzuka Enterprise trial balance at 31 December 2017 is shown as below:
Trial Balance as at 31 December 2017
39
 Capital, 1 January 2017 2,300,000
Stock as at 1 January 2017 1,146,000
Machinery 925,000
Motor vehicles 650,000
Freehold land 5,500,000
Factory building 2,455,000
Provision for depreciation as at 31 December 2017 :
Machinery 425,000
Motor vehicles 320,000
Factory building 325,000
Trade debtors/Trade creditors 1,854,000 1,386,000
Other debtors and deposits 580,500
Other creditors and accruals 284,000
Return Outwards 1,545,000
Discount allowed/discount received 38,000 55,000
Motor expenses 72,000
Electricity and water 510,000
Purchases and sales 8,780,000 15,650,000
Interest expenses 40,000
Cash at bank 69,500
Bank overdraft 210,000
Insurance 180,000
Term loan 300,000
22,800,000 22,800,000

Additional information:
(i) Insurance includes RM25,000 relating to financial year ending 31 December 2018.
(ii) The provision for doubtful debt is to be adjusted to 2% of trade debtors’ balance.
(iii) At 31 Dec 2017, there is electricity and water bill accrued of RM42,000.
(iv) Depreciation for the year ended 31 Dec 2017 has yet to be provided as follows by using reducing
balance method:
Machinery 10%
Motor vehicles 20%
Factory building 2%
(v) Stock as at 31 Dec 2017 was valued at RM1,380,000

Required:

(a) Prepare the Statement of Comprehensive Income for Suzuka Enterprise for the year ended 31 st
December 2017.
(b) Prepare the Statement of Financial Position as at 31st December 2017.
Answer:

(a)
Suzuka Enterprise
Statement of comprehensive income for the year ended 31st December 2017
40
 RM RM RM

Net profit      

(b)
Suzuka Enterprise
Statement of Financial Position as at 31st December 2017

RM RM RM

41
 Fixed Assets:  

Current Assets:  

   
Financed by:  
Owner’s Equity

 
Long-Term Liabilities:

Current Liabilities:

Total Owner Equity & Liabilities

Tutorial 9: Final Accounts of the Sole Trader

Mr. Tan works as an accounting clerk in On-vest Software Enterprise. The principal activities of the
company are selling software program and providing maintenance services to the clients. Mr. Tan was
asked to prepare a financial statement for the year ended 31 January 2019. He extracted the following
ledger balances:
42
 ON-VEST SOFTWARE ENTERPRISE.
Trial Balance as at 31 January 2019
Debit (RM) Credit (RM)
Cash 8,000
Bank 967,000
Trade debtors 4,500
Office Supplies 200
Computer equipment 350,000
Furniture 20,000
Land 40,000
Accumulated depreciation:
Computer equipment 70,000
Furniture 2,000
Trade creditors 500
Salaries payable 7,000
Unearned revenue 12,650
Provision for doubtful debt 550
Paid up capital 500,000
Sales and purchase 195,000 422,000
Service revenue 8,900
Interest expenses 90,000
Salaries expenses 17,550
Advertising expenses 25,000
Miscellaneous expenses 4,500
Bad debt expenses 900
Prepaid rent 6,000
Inventory (1 February 2018) 295,000
Mortgage loan (12% p.a.) 1,000,000
Accrued electricity bill 1,250
Carried inwards 460
Discount received and discount allowed 1,000 260
2,025,110 2,025,110
Additional information:

(i) A stock take values the closing stock at RM166,000.

(ii) Received RM 2,500 from Spidernet Enterprise for the purpose of providing software
maintenance service and has been included in service revenue account. However, the service
has yet to be provided.

43
(iii) Prepaid rent of RM300 had expired.
(iv) Depreciation for the fixed assets are based on the following data:

Computer Equipment 20% on net book value

Furniture 10% on cost

(v) 10% of the trade creditors have been paid by cash.

(vi) One of the trade debtors, Supermario Enterprise, which owed RM2,000 has been recognized as
bankrupt.
(vii) A 25% doubtful debt provision is necessary on the year-end trade debtor’s balance.
(viii) The remainder of a full year’s interest on the mortgage loan is still outstanding.

Required:

(a) Draw up a Statement of Comprehensive Income for On-vest Software

Enterprise for the year ended 31 January 2019.

(b) Prepare a Statement of Financial Position for On-vest Software Enterprise as at 31 January
2019.

Answer:

(a)
ON-VEST SOFTWARE ENTERPRISE
Statement of Comprehensive Income for the year ended 31 January 2019

44
 RM RM RM

Gross profit
Other revenue

Less: Operating expenses

Net loss

(b)
ON-VEST SOFTWARE ENTERPRISE
Statement of Financial Position as at 31 January 2019
RM RM RM
Fixes Assets

45
 Current Assets

Total Assets

Financed by:

Long term liabilities

Current Liabilities

Total Owner Equity & Liabilities

Tutorial 10: Correction of Errors

Question 1
A book-keeper could not balance the following Trial Balance:

Trial Balance as at 30 April 2020

46
 RM RM
Purchases and sales 15,700 26,405
Returns 560
Salaries 5,890
General expenses 4,100
Cash at bank 3,010
Petty cash 105
Premises 59,000
Stock 700
Debtors and creditors 6,760 8,460
Capital 60,000
Suspense Account 160

95,425 95,425

The book-keeper had made several errors:

(i) The Sales Account had been undercast by RM400.

(ii) A cheque for RM280 received from a debtor was dishonoured. This was correctly
entered in the Cash Book but credited to the debtor’s account.
(iii) An invoice for RM80 received from a supplier had been completely overlooked and no
entry was made in the books.
(iv) A wrong addition in the Salaries Account resulted in salaries being too high by RM90.
At the same time, a credit balance of RM100 in a creditor’s account was brought down
as RM190 and was included in the creditors total in the Trial Balance.
(v) Purchase of goods worth RM120 had been debited to the General Expenses Account.

a) Journal entries to correct the errors.

b) Prepare the Suspense Account showing how the difference in the books is eliminated.
c) Calculate the new totals in the Trial Balance after the errors have been corrected.

Answer:

a)
Journal entries
Date Particulars   Debit Credit
(i)
47
 (ii)

(iii)

(iv)

(v)

b) Suspense Account  

 c)   Adjusted Trial Balance as at 30 April 2020  

Debit RM Credit RM
Purchase
Sales
Returns
Salaries
General Expenses
Cash at Bank
Petty Cash
Premises
Stock
Debtors
Creditors
Capital
95,815 95,815

Question 2

i The amount of RM320 in a sales invoice to Leo was wrongly entered in the Sales Journal as
RM230 and this amount was subsequently posted to the ledger.
ii When writing up the Purchases Returns Journal, a credit note from Meridian Co Ltd showing
RM720 was overlooked.
48
iii Commission received RM1,500 was wrongly debited to the Commission Expense Account and
credited to the Cash Account.
iv RM588 paid to S. Jaya was debited by mistake to S. Raya’s account.
v Insurance, a sum of RM175, was entered in the Rates Account.

Prepare journal entries to correct the above errors.

Answer:

General Journal Dr (RM) Cr (RM)

i.

ii.

iii.

iv.

v.

Self Study

Question 1
The Statement of Financial Position of a firm is shown as follows:

Statement of Financial Position as at 31 December 2012

49
 Fixed Assets: Capital 24,000
Buildings 26,000 Add Net profit 9,466
Vehicles 6,000 32,000 Current Liabilities:
Current Assets: Creditors 7,225
Stock 1,553 Interest accrued 465
Debtors 2,992 Suspense Account 10
Cash at bank 4,440
Cash in hand 181 9,166

41,166 41,166

The following errors were discovered after the preparation of the final accounts and the Statement of
Financial Position:

(i) Sales returns RM50 by B. Allan had been treated as sales and were debited to his account and
credited to Sales Account.
(ii) The Sales Journal was overcast by RM330.
(iii) RM470 cash drawn out from the Bank Account of the business to pay house rent was entered
wrongly in the Rent Account of the business.
(iv) Discount allowed of RM142 to E. Alison had been debited to his account.
(v) Carriage paid for purchases RM500 was entered correctly in the Cash Book but was entered as
RM556 in the Carriage Account.

Prepare:
a. Journal entries to correct the errors.
b. The Suspense Account to eliminate the difference in the books.

Answer:
a. Journal entries
Date Particulars   Debit Credit
(i)

(ii)

(iii)

(iv)

(v)

b.     Suspense account
 
 
 

[Past Year Question: April 2012]

50
Q2. Show the journal entries to correct the following errors (Narratives are not required)

i. A purchase of goods on credit from Century Sdn Bhd which amount to RM20,000 has been
completely omitted.

ii. A rental payment of RM1,000 has been debited to the rent revenue account.

iii. Salary expense of RM5,400 that was paid by cheque has been wrongly recorded as RM4,500
in both accounts.

iv. The owner has withdrawn cash of RM3,300 for personal use and it was debited to the General
Expenses account.

v. A cash sales of RM2,900 has been debited to the Sales account and credited to the Cash
account.

vi. The discount received has been overstated by RM100. In addition, the discount allowed has
also been overstated by the same amount.

Answer:
Journal entries
Debit (RM) Credit (RM)
i.

ii.

iii.

iv.

v.

vi.

[Past Year Question: September 2011]

You are required to journalize the corrections for the following errors (narratives are not required).

(a) RM850 paid to Chris was debited to both cash book and the creditor account.

(a) A cheque of RM190 paid to Desmond was dishonored. This transaction has been incorrectly
credited in both Desmond account and cash book as RM90.

51
(b) The sales ledger was overcasted by RM300.

(c) RM450 charged for painting has been recorded into building account.

Answer:

Journal entries
Debit (RM) Credit (RM)
(a)

(b)

(c)

(d)

[Past Year Question: April 2010]

Show the journal entries to correct the following errors (Narratives are not required)

i. A credit note of RM300 received from Star Enterprise was completely omitted.
ii. A credit sale in the value of RM120 has been debited to both debtor and sales accounts
respectively.
iii. Total purchases have been undercasted by RM3,960 in the purchase journal.
iv. Commission paid of RM200 was erroneously recorded as commission revenue but was
correctly credited in the cash book.
v. Included in the salary paid was a sum of RM80 taken out by the owner of the business for his
personal use.
vi. A miscellaneous expense of RM260 was correctly entered into the cash book but
wrongly recorded as RM2,600 in the miscellaneous expenses account.

Answer:
Journal entries
Debit (RM) Credit (RM)
(i)

(ii)

52
 (iii)

(iv)

(v)

(vi)

Tutorial 11: Control Accounts

Question 1
On 1 August, a firm had the following debtors:

Sari Artists RM2,000

Henry Jewelers RM1,500
53
 L. Grant RM2,200
S. Raj RM500

Transactions for the month of August were as follows:

(i) Credit sales: Sari Artists RM5,220

Henry Jewelers RM3,450
L. Grant RM2,930

(ii) Goods returned:Henry Jewelers RM300

L. Grant RM150

(iii) Sari Artists was overcharged for goods by RM55.

(iv) The cash book of the firm showed the following receipts from its customers:

Discount Allowed Cheques Received

Sari Artists RM80 RM1,920
Henry Jewelers RM100 RM2,500
L. Grant - RM1,200

(v) The debt owing by S. Raj was irrecoverable and was treated as a bad debt.

(vi) The cheque for RM2,500 from Henry Jewelers was dishonoured and the discount allowed was
withdrawn.

You are required to prepare the Sales Ledger Control Account in the General Ledger.

Answer:

Sales Ledger Control Account

Question 2

Based on the information below prepare debtors and creditors control accounts for the month of July.

RM
July 1 Debtors balance (dr) 50,800
(cr) 125
Creditors balance (dr) 369
54
 (cr) 42,000
July 31 Purchases 88,000
Sales 120,000
Credit note sent to debtors 300
Debtors accounts transfer to creditor’s accounts 2,400
Bad debt written off 80
Return outwards 420
Cash received from debtors 64,000
Cash paid to seller 29,500
Discount received 560

Additional information:

(i) 80% of the total purchases are credit transactions.

(ii) All sales are credit transactions

Answer:

Dr Debtors Control Account Cr

RM RM
July 1 Balance b/d 50,800 July 1 Balance b/d 125

OR

Dr Debtors Control Account Cr

RM RM
July 1 Balance b/d 50,675

Dr Creditors Control Account Cr

RM RM
July 1 Balance b/d 369 July 1 Balance b/d 42,000

55
 OR

Dr Creditors Control Account Cr

RM RM
July 1 Balance b/d 41,631

Self Study

Question 1
The following balances are extracted from the books of a firm on 31 December 2002:

RM
On 1 January 2002:
Credit balances in Sales Ledger 320
Debit balances in Sales Ledger 13,000
56
 For the year to 31 December 2002:
Sales on credit 100,000
Bad debts 400
Discount allowed 1,500
Sales returns 900
Cheques received from customers including a cheque of
RM100 which was dishonoured 82,000
Legal expenses (for recovery of debts) charged to debtors 200
Credits in Purchases Ledger transferred to Sales Ledger 250

On 31 December 2002:
Credit balances in Sales Ledger 800

a) Prepare a Sales Ledger Control Account

b) Explain the purpose of preparing control accounts.

Answer:

a). Sales Ledger Control Account

RM RM

 
 
114,100 114,100
1/1/03 Balance b/d 28,730 1/1/03 Balance b/d 800

b) Purpose of preparing control accounts:

Question 2
The followings are the total transactions for Galaxy Bhd. that took place during January 2018.

On 1 January 2018: RM
Debtors balance (dr) 9,900
Creditors balance (cr) 7,300

During the month of January 2018: RM

Sales 189,000
Purchases 149,500
57
 Discount received 4,700
Transportation charged to debtors 1,800
Discount allowed 2,300
Contra 3,600
Total cash receipt from customers 27,000
Cheque received from debtors 61,000
Cheque paid to creditors 84,000

Additional information:

(i) 80% of sales and 60% of purchases were in credit terms.

(ii) 50% of cash received from customers were payment from debtors.

(iii) 2% of opening debtor’s balance were written off as bad debts.

Required:

Prepare the Sales Ledger Control Account and Purchases Ledger Control Account.

Answer:

Sales Ledger Control Account

2018   RM 2018   RM

Balance c/d 82,302

162,900   162,900

58
 Purchases Ledger Control Account
2018   RM 2018   RM

Balance c/d 4,700

97,000   97,000

Question 3
Below is the summary of debtors’ and creditors’ transactions for the Matrix Sdn. Bhd. occurred
in August 2015:

On 1 August 2015: RM
Debtors balance (dr) 8,000
Creditors balance (cr) 10,000

During the month of August 2015:

Sales 100,000
Purchases 70,000
Cash received from debtors 11,000
Cheque received debtors 30,000
Cheque paid to creditors 50,000
Contra 2,000
Discount allowed 1,700
Discount received 4,400
Bad debt 300

Additional information:

(i) 70% of the sales and 80% of purchases were in credit terms.

(ii) Dishonoured cheque RM1,800 was found and discount allowed RM200
was withdrawn.

Required:

Prepare Debtors Control and Creditors Control Account for the month of
August 2015.

59
Answer:

Debtors Control Account

2015 RM 2015 RM

Balance c/d 35,000

80,000 80,000

Creditors Control Account

2015 RM 2015 RM

Balance c/d 9,600

66,000 66,000

60
Tutorial 12: Bank Reconciliation Statement
Guidelines:
1. Compare the cash book and the bank statement to identify any items that are not recorded on both.
Student is advised to tick to those items appeared in both documents and circle to those are not.

2. Prepare an updated Cash Book. Refer to the bank statement and record those items into the updated
cash book. (Debit column in the bank statement=spending, Credit column in the bank
statement=received money).

3. Prepare the Bank Reconciliation Statement. Refer to the cash book given and record those items into
the Bank Reconciliation Statement.

Cash book
Johny Sky Venture
Derric Debtors The star SB. Creditors
=uncredited cheques =unpresented cheques

Question 1
The following are the cash book prepared by Gaga Sdn. Bhd. and the bank statement received for the
month of March 2020 from Public Bank Berhad on 7 April 2020.

Cash Book (Bank Column)

Date Particulars RM Date Particulars Chq No. RM
Mar Mar
1 Balance b/d 7,374.10 9 Shine Sdn. Bhd. 250003 5,500.00
6 Quest Sdn. Bhd. 5,600.00 10 Wonderland 250004 4,780.50
6 Seagate Sdn. Bhd. 3,900.00 11 Beauty Sdn. Bhd. 250005 8,450.00
9 Johnny English 900.00 24 Electricity 250006 705.00
18 Black Sdn. Bhd. 500.00 26 Salaries & Wages 250007 3,600.90
29 Gateway Sdn. Bhd. 1,440.50 27 Bottle Sdn. Bhd. 250008 1,100.80
29 Mark & Sense 2,330.00 28 Drawings 250009 2,260.00
30 Jazz Entertainment 2,720.00 29 Water 250010 390.40
31 Balance c/d 3,023.00 30 Ayam Silver 250011 1,000.00
27,787.60 27,787.60

Gaga Sdn. Bhd.

Statement of Account – March 2020
Date Particulars Debit Credit Balance
1 Balance 9,560.20
2 250001 2,340.60 7,219.60
3 Deposit 1,500.00 8,719.60
5 250002 1,345.50 7,374.10
6 Stamp duty 50.00 7,324.10
9 Deposit 5,600.00 12,924.10
10 Deposit 3,900.00 16,824.10
13 250003 5,500.00 11,324.10
14 Deposit 900.00 12,224.10

61
 14 250005 8,450.00 3,774.10
17 Standing order 2,700.00 1,074.10
19 Credit transfer 6,000.00 7,074.10
20 Deposit 500.00 7,574.10
24 250006 705.00 6,869.10
24 Commitment fee 45.00 6,824.10
27 250007 3,600.90 3,223.20
28 Interest 650.00 3,873.20
27 Direct debit 1,100.00 2,773.20
30 250010 390.40 2,382.80
31 Charges 345.50 2,037.30

Required:

(a) Reconcile the opening cash book and bank statement balances
(b) Prepare the adjusted cash book with necessary entries
(c) Prepare bank reconciliation statement as at 31 March 2020

Answer:
(a)
Statement reconciling the opening balance with bank statement
RM RM
Opening balance as per Cash Book

Opening balance as per Bank Statement

(b)
Adjusted Cash Book
RM RM

(c)

62
 Bank Reconciliation Statement as at
RM RM
Balance as per adjusted cash book

Balance as per bank statement

Self Study

63
Question 1
There is a difference between the balance shown in the cash book, RM3,050 (credit balance)
and the bank statement, RM6,045 (credit balance). The following are the transactions that
occurred during September 2016 that caused an imbalance between these two records.

(i) Payments were made directly through company’s bank account but the
company has not recorded yet.

Descriptions RM
Service charges 30
Standing order-Loan 1,500
Administrative Charges 305

(ii) There were direct deposits transferred into the bank account.

Descriptions RM
Credit Transfer 6,500
Interest 550

(iii) Cheques were issued to suppliers for payments. However, bank

statement shown no records of these transactions.

Suppliers RM
Lohenzo Furniture 4,780
Kamal Sdn. Bhd. 2,260
ABC Restaurant 1,000
(iv) Cheques received from debtors have been banked in but it is still
pending to be deposited.

Company name RM
TH Sdn. Bhd. 1,440
Casa Sdn. Bhd. 2,720

Required:

Prepare the Updated Cash Book and the Bank Reconciliation Statement as at 30
September 2016.

Answer:

64
 Updated Cash Book
2016 RM 2016 RM

7,050 7,050

Bank Reconciliation statement as at 30 September 2016

RM RM
Balance as per revised cash book

Add: Unpresented cheques

Less: Uncredited cheques

Balance as per bank statement (Credit balance) 6,045

Question 2

65
Hannah received the following Bank Statement on 2 June 2002.

Pacific Bank
Account: Hannah Statement of Account
Date: 31 May 2002
Date Chq. Debits Credits Balance
2002 No. RM RM RM
May 1 Balance b/d 15,240
15 Cheque 711 1,800 13,440
22 Deposit 2,620 16,060

Hannah compared her Bank Statement with her Cash Book.

Cash Book (Bank columns only)

2002 RM 2002 Chq. RM
No.
May 1 Balance b/d 15,240 May 13 George Woo 711 1,800
15 Sales 2,620 31 Purchases 712 920
30 H.S. Loo 1,500 Balance c/d 16,640
19,360 19,360
Jun 1 Balance b/d 16,640

(a) Which entries in the Cash Book are not found on the Bank Statement and why are they not
entered on the Bank Statement yet?
(b) Prepare a statement to reconcile the balance on the Bank Statement with the balance in the
Cash Book on 31 May 2002.

Question 3:

66
The following is the cash book (bank column) of F. King for December 2005

  Cash Book  
2005 2005
6/12 P Pan 230 1/12 Balance b/d 1,900
20/12 C Hook 265 10/12 J Lamb 304
31/12 W Britten 325 19/12 P Wilson 261
31/12 Balance c/d 1,682 29/12 K Coull 37
2,502   2,502

Bank Statement for the month is:

Bank Statement
2005 Dr Cr Balance
1/12 Balance 1,900 Dr
6/12 Cheque 230 1,670 Dr
13/12 J Lamb 304 1,974 Dr
20/12 Cheque 265 1,709 Dr
22/12 P Wilson 261 1,970 Dr
30/12 Tox : Standing Order 94 2,064 Dr
31/12 F Rays : trader credit 102 1,962 Dr
31/12 Bank charges 72 2,034 Dr

You are required to:

a. Make the necessary entries in the Cash Book to amend the balance.
b. Prepare a Bank Reconciliation Statement to account for the difference between the Bank
Statement balance and the amended Cash Book balance.

__________________________The End ________________________

67