FACULTY OF ACCOUNTANCY

FINANCIAL ACCOUNTING 4
FAR270

PREPARATION OF PUBLISHED FINANCIAL STATEMENT

PREPARED BY:

NO MEMBERS STUDENT ID
1 DANIA ELLYSA BINTI ZAIDIE 2022482272
2 HASYA AUNI QISTINA BINTI NORHAZUKI 2022644206
3 NUR MALIHAH BINTI CHE MOOD 2022892078
4 ROSLYNN NURNAZIRAH BINTI ROSLI 2022696348

PREPARED FOR:
SAMSURIA BINTI ABDUL RAHMAN

CLASS:
D1AC1104A

SUBMISSION DATE:
4 JULY 2024
Table of Contents

Introduction........................................................................................................................

Appendix A.........................................................................................................................

Adjustment & Journal entries.............................................................................................

Statement of Profit or Loss and Other Comprehensive Income........................................

Statement of Changes in Equity........................................................................................

Statement of Financial Position.........................................................................................

Notes on PPE....................................................................................................................
INTRODUCTION

Elite Home Furniture, located at 342 Jalan Yahya in Kota Bharu, Kelantan provides high-
quality, contemporary furniture for homes and workplaces. We provide a large choice of
furniture items, including couches, dining tables, beds, workplace desks, and ergonomic
chairs. The materials that Elite Home Furniture Bhd prioritizes in products are rubberwood,
meranti, jati and more. We pride ourselves on our commitment to sustainability, sourcing
eco-friendly materials, and supporting local artisans. Our company operations include design
suggestions, custom furniture manufacture, and a showroom where buyers may see our
items firsthand. We aim to enhance the living and working environments of our customers by
providing stylish, comfortable, and durable furniture solutions. Elite Home Furniture hires 7
employees to assists in this business. All the employees have been given different positions,
one of them is a manager, two of them are delivery men and the rest are promoters. Elite
Home Furniture also have a few branches located outside Kelantan and two small
warehouses which are used for furniture stock storage located at Pasir Mas and Pengkelan
Chepa near the branch. Elite Home Furniture started business on 1 January 2020 and
financial year end at 31 December 2023 and the financial was authorized on 30 June 2024.
APPENDIX A

Trial Balance as at 31 December 2023

Debit Credit
RM RM
Ordinary share capital 12,000,000
10% Preference share capital 4,000,000
Retained profit as at 1 January 2023 11,457,500
Revenue 70,550,000
Cost of sales 35,240,000
Administrative expenses 10,500,000
Selling and distribution expenses 9,500,000
Audit fees 55,000
Directors' remuneration 700,000
Consultancy fees 150,000
Long term loan from Mentari Bank 2,500,000
Long term investment 6,637,500
Freehold land 16,625,000
Building 5,000,000
Plant and equipment (at cost) 4,500,000
Accumulated depreciation as at 1 January 2023:
Building 300,000
Plant and equipment 2,025,000
Trade receivables 4,500,000
Inventories 5,200,000
Trade payables 2,750,000
Allowance for impairment of trade receivables as
at 1 January 2023 750,000
Tax paid 3,150,000
Interim dividend – preference share 350,000
Investment income 325,000
Cash at bank 4,550,000
106,657,500 106,657,500

Note:

1. All figures should be round up to nearest RM.

ADJUSTMENT

MFRS116

Purchase new asset

1. On 1 January, Elite Home Furniture purchased a new plant and equipment but has
not been recorded in any account with cost of RM150,000.

Date Particulars Debit Credit

Jan 1 Plant and equipment 150,000
Bank 150,000

Depreciation

1. Building has a salvage value of RM750,000 and 20 years starting from 1 January
2023 and it is depreciated based on straight line method yearly basis.

Date Particulars Debit Credit

Jan 31 Depreciation (5,000,000-750,000)/20 212,500
Accumulated depreciation 212,500

2. Plant and equipment depreciated at 10% per annum based on reducing balance
method on yearly basis.

Workings:

4,500,000 + 150,000 = RM4,650,000

4,650,000 – 2,025,000 = RM2,625,000

(2,625,000 – 240,000) x 10% = RM238,500

Date Particulars Debit Credit

Jan 31 Depreciation (2,625,000 – 240,000) x 10% 238,000
Accumulated depreciation 238,000

Revaluation

1. Elite Home Furniture adopted the revaluation model for its land. It acquired freehold
land on 1 January 2022 with a cost of RM16,625,000. On 31 December 2023, the fair
value is RM17,000,000 due to the location of the property that is highly valuable.
 Date Particulars Debit Credit
Jan 31 Land (17,000,000-16,625,000) 375,000
Asset revaluation reserve 375,000

Impairment Test

1. Building was purchased 2 years ago and being written off over a period of 20 years.
Due to ecological changes, the area was hit by serious flood in 2023. On 31
December 2023, the fair value less costs to sell is RM4,550,000 and the value in use
is RM4,300,000.

Workings:

Depreciation: (5,000,000-750,000)/20 = RM212,500

Carrying amount: 5,000,000 – 512,500 = RM4,487,500

Recoverable amount: 4,487,500 – 4,450,000 = RM37,500

Date Particulars Debit Credit

Dec 31 SOPL - Impairment loss 37,500
Accumulated depreciation - building 37,500

Disposal

1. On 9 November 2023, Elite Home Furniture decided to dispose an old plant and
equipment because of electrical discharge, costing RM300,000. Estimated useful life
of the plant and equipment is 10 years and it has been used for 2 years. Proceed
from sale amounting RM250,000.

Date Particulars Debit Credit

Nov 19 Bank 250,000
Accumulated depreciation (300,000/10) x 2 60,000
SOPL – gain on disposal 10,000
Plant and equipment 300,000
MFRS140

1. On 4 April 2023, Elite Home Furniture acquired a building that is vacant but is held to
be leased out for an amount of RM60,000 but has not been recorded in any account.
The amount received will be in cheque.

Date Particulars Debit Credit

Apr 4 Investment property 60,000
Bank 60,000

2. 23 May 2023, Elite Home Furniture acquire a new land that was held for currently
undetermined future use amounting to RM100,000. The amount received will be in
cheque.

Date Particulars Debit Credit

May 23 Investment property 100,000
Bank 100,000

MFRS108

Prior Period Error

1. Payment RM9,000 was made to the trade supplier on 10 January 2022. The payment
was accounted as employee salaries and included as administrative expenses. The
error was discovered in 2023.

Date Particulars Debit Credit

Dec 31 Trade payable 9,000
SOPL – administrative expenses 9,000

2. On 3 March 2023, Elite Home Furniture discovered fraudulent transactions made by

employee and immediately dismissed him. Cash receipts from customers totalling
RM470,000 had been divested by the employee since 2021. A quarter (1/4) was
stolen during the current year ending 31 December 2023 while the remaining was
stolen during the previous year. As of 31 December 2022, the retained earnings of
Elite Home Furniture were RM800,000.

Date Particulars Debit Credit

 Dec 31 Retained earnings (3/4 x 470,000) 352,000
Net profit (1/4 x 470,00) 117,500
Trade receivable 470,000

MFRS110

Adjusting event

1. On 5 Mei 2024, it was discovered that RM250,000 worth of inventory become

obsolete due to technological advancement.

Date Particulars Debit Credit

Mei 5 Cost of sales 250,000
Inventory 250,000

Non-adjusting event

1. A dividend of RM500,000 is declared after year-end on 5 January 2024.

No entry needed.

2. 22 June 2024, one of Elite Home Furniture warehouses located at Pasir Mas was
damages because of a flood. A loss of RM10,000 is estimated for damages
inventories.

No entry needed.

MFRS137

Provision

1. An employee was injured during working hours. She took legal action and sought
damages of RM10,000 on 16 February 2023. The company has taken legal advice
and is confident will be held liable.

Date Particulars Debit Credit

Feb 16 SOPL – Operating expenses 10,000
Provision for damages 10,000
Contingent asset

1. Elite Home Furniture filed a lawsuit against Puan Hamidah on 25 June 2023 for
reselling sofa amounting RM9,000 that she won from a lucky draw. In this case, she
has breached the terms and conditions of the lucy draw. Elite Home Furniture sued
Puan Hamidah to pay RM10,000 for the breach of contract. However, the case is still
pending.

Disclose in notes.

MFRS15

1. On 15 January 2023, Elite Home Furniture entered a contract to transfer a product to

Encik Adam on 31 January 2023. The contract is structured that Encik Adam required
to pay the full contract price of RM3,800 on 31 January 2023. However, the payment
still not received on the date that was stated. The cost of good transfer is RM1,000.
Elite Home Furniture delivered the product to Encik Adam on 31 January 2023.

Date Particulars Debit Credit

Jan 31 Trade receivable 3,800
Sales revenue 3,800

Cost of goods sold 1,000

Inventory 1,000

2. On 8 September 2023, Elite Home Furniture entered a contract to transfer dining

table and queen bed to Cik Syafira for RM2,500. The contract specifies that payment
of dining table will not occur until the queen bed is also delivered. In other words,
payment will not occur until both furniture are transferred to Cik Syafira. Elite Home
Furniture determined that stand alone prices are RM700 for dining table and
RM1,800 for queen bed. The delivery of the dining table to Cik Syafira was made on
5 October and 20 October 2023, Elite Home Furniture then delivered the queen bed
to Cik Syafira.
 Date Particulars Debit Credit
Oct 5 Contract asset – dining table 700
Sales revenue 700

Oct 20 Bank 2,500

Sales revenue 1,800
Contract asset 700

ADJUSTMENT FROM PREVIOUS SEMESTER TOPICS

MFRS9

1. On 2 November 2023, Rayyan purchased furniture amounting to RM7,000 under

credit term 5/15, net 19 assuming that Rayyan took the cash discount. Then, on 13
November 2023, Rayyan paid for the furniture and got 5% of the purchase.

Date Particulars Debit Credit

Nov 2 Trade receivable 7,000
Sales 7,000

Nov 13 Bank (7,000-350) 6,650

Cash discount (7,000 x 5%) 350
Trade receivable 7,000

MFRS102

1. On 16 August 2022, Elite Home Furniture purchased 120 couches from Elegant Bhd.
The terms of the purchased are as follows:
 Invoice price RM4,900 per unit with trade discount of RM50
 Credit term of 60 days from the date of invoice

Elite Home Furniture incurs the following cost for the purchase:

Transportation cost RM2,000 and handling cost RM500

However, Elite Home Furniture paid on the same date with cheque.
Date Particulars Debit Credit
Aug 16 Inventory 590,450
Bank (588,000-50+2,000+500) 590,450

TAXATION

1. Elite Home Furniture still did not pay tax for the current year amounting RM120,000.

Date Particulars Debit Credit

Dec 31 SOPL – Tax expenses 120,000
Tax payable 120,000
 ELITE HOME FURNITURE
Statement of Profit or Loss and Other Comprehensive Income for the year ended 31
December 2023

RM
Revenue (70,550,000 + 700 + 1,800 + 3,800 – 117,500 – 350) 70,438,800
Discount allowed (350)
Net revenue 70,438,450
Cost of sales (35,240,000 + 250,000 + 1,000) (35,491,000)
Gross Profit 34,947,450
Administrative expenses (10,997,000)
Selling and distribution expenses (9,500,000)
Operating expenses (897,500)
Profit From Operation 13,552,950
Investment Income 325,000
Gain on disposal 10,000
Profit Before Tax 13,887,950
Taxation (3,150,000 + 120,000) (3,270,000)
Profit For the Year 10,617,950
Other Comprehensive Income
Surplus in revaluation 375,000
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 10,992,950

Workings:
Administrative Selling and Operating
expenses distribution expenses
expenses
As per Trial Balance 10,500,000 9,500,000 -
Audit fees 55,000
Director’s remuneration 700,000
Consultancy fees 150,000
Depreciation:
Building (5,000,000-750,000)/20 212,500
Plant, property and equipment
(4,350,000-1,995,000) x 10% 238,500
Prior year error (9,000)
Impairment loss 37,500
Provision for damages 10,000
TOTAL 10,997,000 9,500,000 897,500