A-LEVEL

REVISION 2
Question 1
The following Trial Balance was extracted from the books of Kinokuniya as at 31 st December
2013:
Particulars
Cash
Bank
Capital
Commission
10% Loan from CIMB
Allowance for doubtful debt
Inventory as at 1 January 2013
Purchases and Sales
Return Inwards and Outwards
Bad debts
Salary expenses
8% Fixed Deposit
Drawings
Discount allowed

Debit ()
13,300
38,500
2,400

37,600
190,000
3,200
5,000
28,400
18,000
3,650
1,400

Interest received on fixed deposit

Carriage expenses

Credit ()

37,810
3,100
270,000
2,000
360,000
1,800

2,440
2,200

Acc. Depreciation as at 1 January 2013:

Fixtures and Fittings

4,750

Plant and machinery

9,000

Duty on purchases
Administrative expenses
Accounts Receivable and Accounts Payable
Utilities
Insurance on purchases
Fixtures and Fittings
Land and Building
Plant and machinery
Total

350
6,100
40,100
3,300
800
19,000
220,000
75,000
708,300

17,400

708,300

Additional information:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Included in the carriage expenses is carriage inwards amounting to 750.

The owner used 1,400 cash to pay his sons tuition fee.
Debts of 1,950 are to be written off as bad debts.
Allowance for doubtful debt is to be adjusted to 12% on the outstanding debtors.
Depreciation is to be provided as follows:
Fixtures and Fittings 5% on cost
Plant and machinery 12% on book value
The loan from CIMB was taken on 1 January 2013. The interest on loan at 10% per annum was
still accrued on 31 December 2013.
Administrative expenses of 900 were still unpaid.
Accrued utilities expense of 700 was not recorded.
The commission expense was paid for the period from 1 September 2013 to 31 August 2014.
Inventory on 31 December 2013 was valued at 35,000.

Required:
a)

Statement of comprehensive income for the year ended 31 December 2013, and;

b)

Statement of financial position as at that date.

(15 marks)
(10 marks)
Total: 25 marks

SOLUTIONS:
Question 1
Adjusting entries:
(FYI, all adjustment must at least involve adjustments on two different accounts.)

1.
2.
3
4.

5.

6.
7.
8.
9.
10.

Dr

Carriage inwards
Cr
Carriage expenses
Dr
Drawings
Cr
Cash
Dr
Bad debts
Cr
Account receivables
Dr
Allowance for doubtful debts (increase)
Cr
Allowance for doubtful debts
[12% x (40,100 1,950)] 2,000
Dr
Depreciation-fixtures and fitting (F&F)
Cr
Accumulated depreciation- F&F
(5% x 19,000)
Dr
Depreciation-Plant and machinery (P&M)
Cr
Accumulated depreciation- P&M
[12% (75,000-9,000)]
Dr
Interest on loan
Cr
Accrued interest on loan
Dr
Administrative expense
Cr
Accrued administrative expense
Dr
Utilities expense
Cr
Accrued utilities expense
Dr
Prepaid commission expense
Cr
Commission expense
Dr
Interest received on fixed deposit
Cr
Prepaid interest received on fixed deposit
(**even though this item was not mentioned in the
additional info, please check the % and do necessary
adjustments)

Debit
750

Credit
750

1,400
1,400
1,950
1,950
2,578
2,578
950
950
7,920
7,920
27,000
27,000
900
900
700
700
1,600
1,600
1,000
1,000

Kinokuniya
Statement of Comprehensive Income for the Year Ended 31 December 2013

Sales
(-) Return Inwards
Net Sales
(-) Cost of Goods Sold (COGS)
Opening Inventory
Purchases
(-) Return Outwards

360,000
(3,200)
356,800

37,600
190,000
(1,800)
188,200
800
750
350
227,700
(35,000)

(+) Insurance on purchases

Carriage Inwards
Duty on purchases
(-) Closing Inventory
COGS
Gross Profit

(192,700)
164,100

Add: Revenue
Commission
Interest received on fixed deposit (2440-1000)

3,100
1,440
4,540

Less: Expenses
Administrative Expenses (6,100+900)
Utilities (3,300+700)
Commission (2,400-1,600)
Bad debts (5,000+1,950)
Increase in allowance for doubtful debts

7,000
4,000
800
6,950
2,578

[12% x (40,100 1,950)] 2,000

Salary expenses
Discount allowed
Carriage expenses (2,200-750)
Interest on loan (10% X 270,000)
Depreciation- Furniture and Fittings (5% x 19,000)
Depreciation- Plant and machinery [12% (75,000-9,000)]

28,400
1,400
1,450
27,000
950
7,920
(88,448)
80,192
(15 marks)

NET PROFIT

Kinokuniya
Statement of Financial Position as at 31 December 2013

ASSETS
Non-current Assets
Land and Building
Plant and machinery
Fixtures and Fittings

Cost
220,000
75,000
19,000

Acc. Dep
(16,920)
(5,700)

NBV
220,000
58,080
13,300
291,380

Investments
8% Fixed deposit
Current Assets
Inventory
Accounts receivable (40,100-1,950)
(-) Allowance for doubtful debt (2000+2,578)
Cash (13,300-1,400)
Bank
Prepaid commission expenses

18,000
35,000
38,150
(4,578)
33,572
11,900
38,500
1,600
120,572
429,952

Financed by:
Owners Equity
Capital
(+) Net profit
(-) Drawings (3,650+1,400)

37,810
80,192
5,050
112,952

Non-current Liabilities
10% Loan from CIMB
Current Liabilities
Accounts payable
Accrued interest on loan
Accrued administrative expenses
Accrued utilities expenses
Prepaid interest received on fixed deposit

270,000
17,400
27,000
900
700
1,000
47,000
429,952
(10 marks)

For final,
1) Please dont repeat the same mistakes esp few comments yg I dah remind berkali2. E.g,
dont forget to write the name of company on top of your financial statements, adjust both items
in income statement and balance sheet (double entry concept).
2) Please remember the format of I/S and B/S.

3) Study chapter 24 for theory questions.