BBM205 Basic Accounting Assignment

BBM205/03 Basic Accounting

Course Assignment (25%)

Semester 1, January 2022

Question 1 The unadjusted trial balance and the adjustment data for Robin Training Institute are given below along with adjusting entry information. Robin Training Institute Unadjusted Trial Balance as at 31 August 2021

RM RM

Cash 58,000

Accounts receivable 59,000

Prepaid insurance 12,000

Equipment 8,000

Accumulated depreciation for equipment 2,000

Buildings 57,500

Accumulated depreciation for buildings 17,500

Land 55,000

Unearned rent 16,000

Bank loan 50,000

Capital 115,600

Fees earned 97,400

Wages 32,000

Utilities 8,000

Repairs and maintenance 5,000

Interest expense 4,000

Total 298,500 298,500

Additional information:

i. The Prepaid Insurance account consists of a payment for one year policy. An analysis of the insurance invoice indicates that one half of the policy has expired by the end of the 31 August year-end.

ii. A cash payment for space sublet for 8 months was received on 1 March and was credited to Unearned Rent.

iii. Accrued interest expense on the loan of RM1,000 has been incurred but not paid.

Required: If these adjustments are not recorded,

a. Show and explain the impact on net income with calculation without the adjustments and with the adjustments. (11 marks)

b. Explain the accounting principles that are being violated if the adjustments are not made. (4 marks)

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Question 2 Johan started a new business, and completed the following transactions during its first month of

operations.

i. Johan invests RM80,000 cash in the business by depositing the money in the

bank account.

ii. The company purchased a piece of land for RM52,000 by cheque.

iii. The company also purchased a building for RM36,000 to use as an office, paying

RM6,000 by cheque and a loan from Maybank for the remaining RM30,000.

iv. Purchased tools and equipment on account, RM13,800

v. Sold some of the tools at a price equal to their cost, RM1,800, collectible within45

days.

vi. Received RM600 in partial collection of the account receivable from the sale of

tools

vii. Paid RM6,800 in partial payment for the tools and equipment purchased on

account earlier.

Required:

To record the transactions using the Accounting Equation. (15 marks)

Question 3 A company made the following merchandise purchases and sales during the month of May with the assumption that there was no beginning inventory:

Date Activities Units Acquired at

Cost

Units Sold at Retail

1 May Purchased 300 units at RM15/unit

3 May Purchased 270 units at RM20/unit

8 May Sold 500 units at RM55/unit

12 May Purchased 300 units at RM24/unit

14 May Sold 250 units at RM55/unit

23 May Purchases 250 units at RM30/unit

25 May Purchases 800 units at RM25/unit

31 May Sales 900 units at RM55/unit

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Required:

a. Compute the value of the inventory a s at 31 M a y 2021 b y using t h e f i r s t - i n , f i r s t o u t ( F I F O ) m e t h o d . (13 marks)

b. State the value of purchases, cost of goods sold and sales. (2 marks) Question 4 The following information is available for the Avira Language Center for the month of September 2021.

i. On 30 September, after all transactions have been recorded, the balance in the company's Bank account has a balance of RM27,202.

ii. The company's bank statement shows a balance on 30 September of RM29,279. iii. Outstanding cheques at 30 September include cheque number 3030 in the

amount of RM1,525 and cheque number 3556 in the amount of RM1,459. iv. A credit memo included with the bank statement indicates that the bank collected

RM780 on a noninterest-bearing note receivable for Avira. The bank deducted a RM10 collection fee, and credited the remainder of RM770 to Avira's account.

v. A debit memo included with the bank statement shows a RM67 NSF check from a customer, Mr Brown.

vi. A deposit placed in the bank's night depository on 30 September totaled RM1,675, and did not appear on the bank statement.

vii. Examination of the cheques on the bank statement with the entries in the accounting records reveals that cheque number 3445 for the payment of an account payable was correctly written for RM2,450, but was recorded in the accounting records as RM2,540.

viii. Included with the bank statement was a debit memorandum in the amount of RM25 for bank service charges. It has not been recorded on the company's books.

Required: a. Prepare the September bank reconciliation for the Avira. (10 marks)

b. Prepare the general journal entries to bring the company's book balance of bank

into conformity with the reconciled balance as of September 30 2021. (5 marks)

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Question 5 The following is the trial balance for Tatt Trading as at 31 October 2021:

DR CR

RM RM

Bank 6,453

Trade receivables 18,910

Trade payables 22,520

Inventory at 31 October 2020 40,360

Buildings at cost 70,000

Equipment at cost 45,000

Profits b/d 27,000

Capital - 70,000

Purchases 102,360

Sales 165,486

Carriage inwards 2,070

Carriage outwards 1,890

Salaries 18,310

Rates and occupancy expenses 4,735

Repair and maintenance 3,522

Sundry expenses 1,896

Provision for doubtful debts 500

Accumulated depreciation at 31 October 2020:

Buildings 22,000

Equipment 16,000

Drawings 8,000

323,506 323,506

Additional information:

i. Inventory at 31 October 2021 amounted to RM55,000. ii. Repairs and maintenance owing RM222, sundry expenses owing RM196. iii. Salary accrued amount to RM1,310. iv. RM900 is provided for doubtful debts. v. Depreciation on cost: Buildings 2 per cent; Equipment 10 per cent.

Required: Prepare the Statement of Comprehensive Income for the year and the Statement of Financial Position for Tatt Trading as at 31 October 2021. (Total: 40 marks)