CONFIDENTIAL 1 AC/JUL 2023/FAR160

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : FINANCIAL ACCOUNTING 2

COURSE CODE : FAR160
EXAMINATION : JULY 2023
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any materials into the examination room unless permission is given by the
invigilator.

4. Please check to make sure that this examination pack consists of:

i) The Question Paper

ii) An Answer Booklet – provided by the Faculty

5. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 8 printed pages
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CONFIDENTIAL 2 AC/JUL 2023/FAR160

QUESTION 1

A. List FOUR (4) advantages of partnership compared to sole proprietorship

(4 marks)

B. Zakiah, Yanti and Bella are partners of ZayyaBella Trading sharing profits and losses in
the ratio of 3:2:1 respectively. The partnership agreement contains the following
agreements:

i. Interest on beginning capital was allowed at a rate of 6% per annum.

ii. The partnership charge interest on drawings at the rate of 7% per annum.
iii. All partners are not entitled to a monthly salary.

The following is the beginning balance of capital and current accounts as at 1 January
2022:

Capital account (RM) Current account (RM)

Zakiah 260,000 50,000
Yanti 200,000 30,000
Bella 120,000 20,000

During the year 2022, the following transactions took place:

1. Shasha is admitted as a new partner on 1 April 2022. She contributed RM30,000

as her capital and RM12,000 as premium on goodwill by cheque. The goodwill
account is not to be maintained in the firm’s book.

2. However, Bella decided to retire on the same day. It was agreed that RM30,000
of the amount due to Bella would be paid immediately by cheque while remaining
balance would be settled by installment. The closing balance in Bella’s current
statement is to be transferred to her capital statement.

3. Upon the admission of Shasha and retirement of Bella, non-currents assets of

partnership were revalued and there was surplus on revaluation of RM240,000.

4. The new agreement is as follows:

i. Profit or losses are to be shared in the ratio of 4:4:2 for Zakiah, Yanti and
Shasha.
ii. All partners are not entitled to interest on capital
iii. Interest rate for drawings is to be reduced to 5% per annum
iv. Only Shasha is entitled to a salary of RM2,000 per month

5. Drawings made during the accounting period are as follows:

Amount (RM) Date

Yanti 5,400 1 March 2022
Bella 6,600 30 January 2022
Shasha 4,000 1 August 2022

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6. On 1 May 2022, Yanti transferred RM20,000 of her capital account to the

partnership’s loan account. Interest on loan would be charged at 5% per annum
and treated as Statement of Profit or Loss’s item. No record has been made yet.

Net profit for the year ended 31 December 2022 was RM220,000 and it is assumed
that this profit accrued evenly throughout the year.

Required:

Prepare the following:

a. The Goodwill Account for the year ended 31 December 2022.

(2 marks)

b. The Revaluation Account for the year ended 31 December 2022.

(2 marks)

c. The Appropriation Statement showing the pre and post periods for the year ended 31
December 2022.
(7 marks)

d. The Current Statement for Bella for the year ended 31 December 2022.
(3 marks)

e. The Capital Statement for Bella for the year ended 31 December 2022.
(2 marks)
(Total: 20 marks)

QUESTION 2

A. Identify TWO (2) main differences between shares and debentures.

(4 marks)

B. The following is the extract of Statement of Financial Position of RogaRoga Bhd as at

31 December 2021:

RogaRoga Bhd
Statement of Financial Position as at 31 December 2021
RM
Issued and fully paid-up capital
10,000,000 Ordinary shares 30,000,000
4,000,000 8% Preference shares 6,000,000

Reserves
Retained earnings 12,000,000

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Additional information for the year ended 31 December 2022:

On April 2022, the company decided to issue 3,000,000 ordinary shares at RM4.00 each
and also to issue 2,000,000 8% preference shares at RM2.00 each.

Applications received for ordinary shares were oversubscribed by 1,000,000 units. The
excess applications money was refunded to the unsuccessful applicants. While
applications received for 8% preference shares were undersubscribed by 500,000 units.

On 1 September 2022, the company issued RM2,000,000 6% debentures at 95. The

issuance cost incurred was RM12,000. The effective interest rate was 8%. The interest
was paid at the end of the financial year on 31 December 2022. This debenture was
carried out at amortised cost.

Required:

a. Prepare the relevant journal entries to record all the above transactions.
(Narrations are not required)
(10 marks)

b. Prepare the Statement of Financial Position (extract) as at 31 December 2022 for

the equity and liability section only.
(2 marks)

c. Maizura is planning to invest in a high-profit company. She prefers to have more

secured shares that have priority of claim against the company for the dividends.
She does not have any intention to be involved in the management of a company.

Discuss briefly whether she should invest in ordinary shares or preference shares.
(4 marks)
(Total: 20 marks)

QUESTION 3

As at 1 January 2022, the extract Statement of Financial Position of Clemantic Bhd shows the
following balances:

Issued and paid-up capital RM

5,500,000 Ordinary shares 11,000,000

Reserves
Retained earnings 12,800,000
Less: Treasury shares (3,200,000)

Non-Current Liabilities
2,000,000 6% Redeemable preference shares 3,000,000

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Additional information:

On 30 June 2022, the company decided to redeem 50% of its 6% redeemable preference
shares at RM2.00. For the purpose of the redemption, 480,000 units of ordinary shares were
issued at RM2.50 each and the balance is out of retained profit. All the shares offered were
fully subscribed and paid.

A right issue was made to the existing shareholders on a basis of one new ordinary share for
every 100 ordinary shares held as on 1 January 2022 at RM2.00 each.

A total of 600,000 of the ordinary shares were repurchased from the open market at RM2.80
each. The company decided to keep two-thirds of the shares as treasury shares and cancel
the remainder one third of the shares.

Required:

Prepare the relevant journal entries to record the above transactions for the year ended 31
December 2022. (Narrations are not required).
(Total: 15 Marks)

QUESTION 4

MATTA Bhd is a public company with capital comprising of ordinary and 5% preference
shares. The following is the Trial Balance of MATTA Bhd as at 31 December 2022.

RM RM
200,000 Ordinary share capital 400,000
60,000 5% Preference share capital 120,000
Investment 150,000
Sales 1,520,000
General reserve 280,000
Retained earnings 320,800
Rental income 27,500
Cost of sales 500,000
Administrative expenses 95,500
Selling and distribution expenses 88,500
Audit fee 1,800
Directors' remuneration 15,500
Investment income 5,550
Debentures interest expense 2,300
Goodwill 135,000
Building 1,500,000
Plant and equipment 560,000
Inventories 118,500

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Bank 344,900
Trade receivables 104,800
Accumulated depreciation as at 1 January 2022:
Building 375,000
Plant and equipment 168,000
8% Debentures 285,150
Trade payables 220,000
Taxation paid 62,200
Interim dividend: -
Ordinary shares 40,000
Preference shares 3,000
3,722,000 3,722,000

You are given the following information for the year ended 31 December 2022:

1. The directors proposed a final dividend for preference shares and final ordinary dividend
of 10%.

2. The company had announced bonus issue of 10 for every 100 ordinary shares utilizing
the retained profits. The bonus shares do not rank for final dividends.

3. The rental income of RM1,000 is not yet received and debentures interest expense are
still outstanding.

4. On 1 March 2022, the company purchased new machinery worth RM35,000 by cheque.

5. The following depreciation expenses are to be provided:

Plant and Equipment RM28,000

Building RM75,000
Machinery (new) RM3,500

6. Transfer from Retained earnings to general reserve of RM45,000.

7. Tax expense for the year was RM65,600.

Required:

Prepare the following statements in a form suitable for publication and in compliance with the
Companies Act 2016 and related to Malaysian Financial Reporting Standards (MFRSs):

a. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31
December 2022.
(7 marks)

b. Statement of Changes in Equity for the year ended 31 December 2022.

(4 marks)

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c. Statement of Financial Position as at 31 December 2022.

(8 marks)

d. Notes to the financial statements for property, plant and equipment.

(6 marks)
(Total: 25 marks)

QUESTION 5

The following are the extract of accounts balances of Bakers Enterprise as at 31 December
2022, a company producing frozen food for the local market.

RM
Inventory as at 1 January 2022:
Raw materials (at cost) 55,500
Work in progress (at production cost) 39,600
Finished goods (at market value) 15,717
General expenses 12,500
Repairs on the kitchen appliances 8,500
Advertising 3,250
Utilities expenses 10,500
Sales revenue 321,400
Employee’s salaries (office) 23,350
Direct wages 60,500
Purchases of raw materials 95,000
Carriage inwards of raw materials 3,800
Sales return 3,200
Allowance for unrealized profit (1 January 2022) 2,050
Building 280,000
Plant and machinery 65,000
Accumulated depreciation as at 1 January 2022
Building 84,000
Plant and machinery 19,500

Additional information was as follows:

1. Finished goods are transferred from the factory at production cost plus 15%.

2. Inventory as at 31 December 2022:

RM
Raw Materials (at cost) 26,820
Work-in-progress (at production cost) 25,980
Finished goods (at market value) 28,400

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3. Accrued general expenses as at 31 December 2022:

RM
General expenses 650
Utilities 385

4. Advertising expenses is for the period of 1 January 2022 until 31 January 2023.

5. The allocation of expenses was apportioned as follows:

Administrative Factory
General expenses
Depreciation – Building 1/3 2/3
Depreciation – Plant and machinery
Utilities 2/5 3/5

6. The depreciation for the year is charged as follows:

Building 5% on cost
Plant and machinery 10% on carrying amount

Show all your workings and round up your calculation to the nearest RM

Required:

a. Prepare the Manufacturing Account for the year ended 31 December 2022.
(10 marks)

b. Prepare the Statement of Profit & Loss and Other Comprehensive Income for the year
ended 31 December 2022.
(6 marks)

c. Explain any TWO (2) characteristics of non-profit organization.

(4 marks)
(Total: 20 marks)

END OF QUESTION PAPER

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