Question

Amanah Berhad is a furniture manufacturer which is based in Pasir Gudang. The following trial balance was taken from the books of Amanah Berhad on 31 December 2020.

Amanah Berhad Trial Balance as at 31 December 2020
Account	Debit (RM)	Credit (RM)
Cash	12,000
Inventory (1 January 2020)	44,000
Accounts receivables	40,000
Note receivables	7,000
Allowances for Doubtful Debt Account		1,800
Prepaid insurance	4,800
Equipment	105,000
Accumulated depreciation –Equipment		15,000
Account payable		10,800
Share capital - Ordinary		44,000
Retained earnings		60,360
Sales revenue		260,000
Cost of goods sold	111,000
Salaries and wages expense	50,000
Advertising expense	5,360
Rent expense	12,800	_____ _
Total	391,960	391,960

Additional information:

(i)           Insurance expired during the year, RM2,000.

(ii)       Estimated bad debts, 5% of the accounts receivable.

(iii)      Depreciation on equipment, 10% per year.

(iv)      Interest at 5% is receivable on the note for one full year.

(v)       Rent paid in advance, RM5,400 (originally charged to expense).

(vi)      Accrued salaries and wages at December 31, RM5,800.

(vii)     Advertising paid in advance, RM560 (originally charged to expense).

Required;

(a)       Prepare adjusting journal entries for the above items.

(b)       Prepare Income Statement of Amanah Berhad for the year ended 31 December 2020.

(c)          Prepare Statement of Financial Position of Amanah Berhad as at 31 December 2020.

Answer 1

Date	Particulars	Debit	Credit
	Insurance Charges A/c	2000
	Prepaid Insurance A/c		2000
	( Insurance expired during the year, RM2,000.)
	Allowance for doubtful Accounts	200
	Accounts Receivable A/c		200
	(Estimated bad debts, 5% of the accounts receivable,1800 already provided)
	Depreciation A/c	9000
	Accumulated depreciation –Equipment		9000
	(Depreciation on equipment, 10% per year)(105000-15000)*10%
	Profit and Loss A/c	9000
	Depreciation A/c		9000
	(Charged to incone statement)
	Interest On Note Receivable A/c	350
	Interest Income A/c		350
	(Interest at 5% is receivable on the note for one full year)
	Prepaid Rent A/c	5400
	Rent Expenses A/c		5400
	(Rent paid in advance, RM5,400 (originally charged to expense))
	Salaries and wages Expense A/c	5800
	Salaries and wages Payable A/c		5800
	(Accrued salaries and wages at December 31, RM5,800)
	Prepaid Advertising Charges A/c	560
	Advertising Expense A/c		560
	(Advertising paid in advance, RM560 (originally charged to expense))

Amanah Berhad
Statement of Income for the year ending 31 December 2020
Particulars	Amount
Income
Revenue From Sales	260000
Other Income
Interest Income	350
Total	260350
Expenses
Cost of Goods Sold	111000
Salaries and Wages	55800
Advertising Expenses	4800
Depreciation and Amortization	9000
Rent expense	7400
Insurance Charges	2000
Provision for Bad debts	200
Total Expense	190200
Net Profit	70150

Amanah Berhad
Statement of Financial Position as at 31 December 2020
LIABILITIES
Equity and Share Capital
Share capital Ordinary	44000
Reserves and Surplus
Retained earnings	60360
Net Income for the year ended 31-December-2020	70150
Short term Liabilities
Provision for Doubtful debts at 31-December-2020	2000
Accumulated Depreciation
- Equipment	24000
Other Current Liabilities
Trades Payable	10800
Salaries and wages Payable A/c	5800
Total	217110
ASSETS
(I)Fixed Assets
(a)    Tangible Assets
Equipment	105000
Other Non Current Assets
Notes Receivable	7000
Current Assets
Trade Receivable	40000
Inventory	44000
Cash and Cash equivalents	12000
Other Current Assets
Prepaid Insurance	2800
Interest On Note Receivable A/c	350
Prepaid Rent	5400
Prepaid Advertising Charges	560
Total	217110