Question

In: Accounting

a) The company received a grant worth RM6,000 on 15 December 2018. It was an incentive...

a) The company received a grant worth RM6,000 on 15 December 2018. It was an incentive by the government for retraining a group of its employees. The three-month training started in December 2018 has a cost of RM10,000 a month.

None of the transactions related to the above has been recorded.

b) Included in the long-termloans is a loan worth RM4,000,000 at 5% annual interest, granted by a local bank on 1 August 2018, for five-year period. Instalment for the month of December 2018 has not been paid yet and the related interest for the instalment was RM15,200.

None of the transactions related to the above has been recorded.

Required:

Show the necessary adjusting journal entries for the additional information above.

Expert Solution

Answer :

A.

1.

Received Grant from Government.

15 December 2018.

Debit : Cash RM 6,000.

Credit : Government Grants RM 6,000.

( Being Recording of Government Grants Received ).

2.

December 2018.

Assumption : Full Payment of RM 30,000 ( RM 10,000 per month × 3 months) is made in month of December.

Debit : Training Expenses RM10,000.

Debit : Prepaid expenses for Training RM 20,000

Credit : Cash RM 30,000.

Assumption : only RM 10,000 for Current month is Paid for training ).

Debit : Training Expenses RM 10,000.

Credit : Cash RM 10,000.

( Being Recording of Current month Training Expenses ).

B.

December 2018.

Interest on loan due is liability for the entity so, it will be credited by either increasing loan amount or creating interest on loan due account added to loan Account. Interest Expense will be debited.

Debit : interest on loan RM 15,200.

Credit : Loan Payable or Interest on loan due RM 15,200.

( Being interest due on loan is recorded by either increasing the loan payable or interest on loan due added to loan payable )

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