CONFIDENTIAL, ACIDEC 2018/FAR160 iA BS UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : FINANCIAL ACCOUNTING 2 ‘COURSE CODE FAR160 EXAMINATION DECEMBER 2018 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 material into the examination room unless permission is given by the invigitator. 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 9 printed pages (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 2 ACIDEC 2018/FAR160 QUESTION 1 A B. List THREE (3) types of partnerships. (3 marks) Razak, Syazwan and Tamrin are partners of Tenang Partnership sharing profits and losses in the ratio of 5:3:2 respectively. Their partnership agreement stated that: i Interest on drawings are to be provided at 10% per annum. ii. Interest on beginning capital balance of 8% per annum, ji, Razak and Syazwan are entitled to monthly salary of RM2,000 and RM3,000 respectively. The following is the beginning balance of capital and current accounts as at 1 January 2018: Capital account (RM) _| Current account (RM) Razak 150,000 30,000 ‘Syazwan 120,000 20,000 Tamrin 100,000 (10,000) al) ‘The following transactions took place for the year ended 31 December 2018: 1 Tamrin decided to retire on 30 September 2018. The closing balance in ‘Tamrin’s current statement is to be transferred to his capital statement. It was agreed that any balance due to him will be paid immediately by cash. 2. On 30 September 2018, Uthman is admitted as a new partner. He paid RM90,000 for his share of capital and RM48,000 for goodwill by cheque, 3. The new agreement are as follows: i. Profit are to be shared in the ratio of 3:2:1 for Razak, Syazwan and Uthman respectively. ji, _Allpartners are not entitled to interest on capital. ii, Interest on drawings is reduced to 5% per annum. iv. Monthly salary to partners: Razak ‘Syazwan Uthman 4. During the year ended 31 December 2018, the partnership made a net profit of RM350,000. This amount is assumed to be accrued evenly throughout the year. 5. On 30 September 2018, the assets of the partnership were to be revalued as follows: (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL, 3 ACIDEC 2018/FAR160 Cost (RM) | New Value (RM) | Building [200,000 296,000 Motor Vehicles 60,000 70,000 6. The goodwill is valued at RM288,000 on 30 September 2018. Goodwill account will not be maintained in the books. 7. Drawings by the partners during the year: RM Date Razak 80,000 1 April 2018 Syazwan 6,000 4 June 2018 Uthman 4,800 1 October 2018 a. The goodwill statement as at 30 September 2018. (1 mark) b. The revaluation statement as at 30 September 2018. (2 marks) c. Appropriation statement showing the pre and post period for the year ended 31 December 2018. (7 marks) d. Current statement for Tamrin for the year ended 31 December 2018. (2 marks) . Capital statement for Tamrin and Uthman for the year ended 31 December 2018. (2 marks) (Total: 17 marks) QUESTION 2 A. State THREE (3) differences between public company and private company. (3 marks) B. The following is the Statement of Financial Position (extract) of Pawane Bhd as at 31 December 2017: Issued and fully paid up capital_ RM 20,000,000 Ordinary Shares "30,000,000 [8,000,000 8% Preference Shares 8,000,000 [Retained Eamings 15,000,000 ® Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 4 ACIDEC 2018/FAR160 Additional information: 1 On 1 January 2018, the company decided to issue 1,000,000 units of its ordinary shares to the public at RM2.00 per share payable in full on application. The shares were undersubscribed by 150,000 units. 2. The company further issued 800,000 units of the 8% Preference Shares at RM1.50 each, payable in full on application. Applications were received for 900,000 8%Preference Shares. Any excess application money was refunded to the unsuccessful applicants. 3. On 4 September 2018, the company also issued RM5,000,000 6% Debentures at 95. It is assumed that the effective interest rate is 10% and debenture interest was paid at the end of the financial year on 31 December 2018. This debenture is carried at amortised cost. The debentures will be redeemed at par value. Required : a. Prepare the journal entries to record the above transactions. (Narrations are required). (7 marks) b. Prepare the extract of the Statement of Financial Position as at 31 December 2018 for the equities and liabilities section only. (4 marks) . Pawane Bhd is also considering to attract more investors to be their shareholders. The Board of Directors had proposed the following plans: i. Plan A : To Consolidate the shares i, Plan B: To Split the shares Required: ‘Advise which plan Pawane Bhd should undertake in order to attract more small-time investors to invest in the company. (5 marks) (Total: 19 marks) (© Hak Cipta Universiti Teknologl MARA CONFIDENTIALCONFIDENTIAL 5 ACIDEC 2018/FAR160 QUESTION 3 The statement of financial position (extract) of Naurah Bhd shows the following position as at 31 December 2017: Naurah Bhd Statement of financial position (extract) as at at 31 December 2017 RM Tssued and paid up capital 5,000,000 Ordinary shares 40,000,000 Reserves _ Retained earnings 40,500,000 | | Non Current Liability 3,000,000 5% Redeemable preference shares 7 3,000,000 The following transactions took place during the year ended 31 December 2018: 1. On 1 July 2018, the directors of Naurah Bhd decided to redeem all of the 5% redeemable preference shares. 2. In order to finance the redemption, 400,000 units of ordinary shares at RM2.30 per share were issued. All the shares issued were fully subscribed. 3. On 4 November 2018, the company repurchased 750,000 of its ordinary shares from the open market at a price of RM2.50 each for immediate cancellation. 4. On 20 December 2018, the company made a bonus issue to the existing shareholders who held ordinary shares as at 31 December 2017 using retained earnings. The basis of the bonus issue was one (1) new ordinary share for every twenty (20) ordinary shares held. Required: Prepare the relevant journal entries to record the above transactions (Narration is not required). (18 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL QUESTION 4 ACIDEC 2018/FAR160 Richee Bhd is a manufacturing company producing food. Its share capital consisted of ordinary shares and 9% preference shares. Richee Bhd Trial Balance as at 31 December 2018 Debit (RM) Credit (RM) Ordinary share capital 300,000 9% Preference share capital 60,000 Sales 942,000 Retained profit 226,400 Rental income 23,560 Cost of sales 393,300 ‘Administrative expenses 63,200 Selling and distribution expenses 220,300 Audit fee 11,920 Directors’ remuneration 39,420 Finance expense - 4,800 Inventories at cost as at 31 December 2018 111,600 investment 170,000 Trade receivables 100,080 Bank ___ 156,760 Freehold land at cost 150,000 Building at cost 438,000 Motor Vehicles at cost 87,000 ‘Accumulated depreciation - 1 January 2018: Building 13,800 ‘Motor Vehicles: 47,400 ‘6% bank loan 60,000 Trade payables “40,800 Investment income 20,120 Taxation paid ‘52,000 Interim dividend: i Ordinary dividend 6,000 Preference dividend ___2,700 | 4,704,080 1,704,080 (© Hak Cipta Universiti Teknolog! MARA CONFIDENTIAL,CONFIDENTIAL 7 ACIDEC 2018/FAR160 ‘You are given the following information: 1 Depreciations on the non current assets are to be provided as follows: i. Building RM2,760 ii Motor Vehicles RM8,700 Depreciation on Motor Vehicles is to be treated as selling and distribution expenses. 2. Asa year end, the following expenses were still accrued: i. Auditor’ fees of RM3,800 ii. Directors’ remuneration of RM9,000 ili, Half year interest on bank loan 3. During the year ending 31 December 2018, the directors proposed a final dividend for preference shares and final ordinary dividend of 10%. 4. Transfer from retained profit to general reserve of RMS0,000. 5. Tax expense for the year was RM59,000. Required: Prepare the following statements in a form suitable for publication and in compliance with the Companies Act 2016 and related Malaysian Financial Reporting Standards (MFRS). a. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2018 (7 marks) b. Statement of Changes in Equity for the year ended 31 December 2018. (S marks) c. Statement of Financial Position as at 31 December 2018. (8 marks) d. Notes to the financial statements for property, plant and equipment. (5 marks) (Total: 25 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 8 ACIDEC 2018/FAR160 QUESTION 5 The draft financial statements of Aman Bhd as at 31 December 2017 and 2018 are as follows: Aman Bhd ‘Statements of Financial Position as at 31 December 2017 2018 Assets RM RM Land 1,100,000 1,460,000 Machinery (carrying value) 400,000 510,000 Investment 100,000 370,000 Short term investment 180,000 220,000 Inventories 50,000 60,000 Trade receivables 130,000 155,000 Bank 240,000 330,000 Equity and Liabilities Ordinary Share Capital 1,050,000 1,100,000 Preference Share Capital 450,000 700,000 Retained earings 400,000 550,000 Less: Treasury shares (100,000) - Bank Loan = 350,000 Trade Payables 80,000 90,000 Interest payable - 35,000 Tax payable 140,000 130,000 Accrued Distribution cost 10,000 25,000 Dividend Payable 170,000 125,000 100,000 3,105,000 Additional information: The short term investments were part of cash and cash equivalent. Included in the administrative and selling expenses were depreciation on machinery ‘of RM180,000. Sold all Treasury Shares at RM150,000. Investment income for the year is RM80,000. Interest Expense for the year amounted RM35,000. Tax expense for the year is RM120,000 Last year's dividend was paid together with the current year's interim dividend of RM160,000. Net profit before tax for the year ended 31 December 2018 is RM555,000. ‘The increase in Land was due to acquisition of new land. NOTeRe No eo (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 9 ACIDEC 2018/FAR160 Required: a. Prepare the Statement of Cash Flows for Aman Bhd for the year ended 31 December 2018 using the INDIRECT METHOD and in compliance with MFRS 107 Statement of Cash Flows (Show all relevant workings). (16 marks) b. The main source of cash inflows for any successful business is receipts from operating activities. If a company consistently has a negative cash flow, explain the effects to the company's performance. ( marks) (Total: 21 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,