Question

QUESTION 1

For the past two years, Adam and his family have operated a part-time business from their home. The business, received a lot of attentions from the public, quickly building its reputation as an environmentally-conscious delivery service provider. The business has grown enormously and Adam decided to expand his family business, thinking about possibilities of running the business on a full-time basis.

On 1st Dec 2019, Adam decided to rent a shop and to operate the business known as Adam Delivery and Transportation Services. The following is the Trial Balance of the business as at 1st Dec, 2019:

Adam Delivery and Transportation Services

Trial Balance as at 1st Dec 2019

Accounts	Debit (RM)	Credit (RM)
Capital		45,000.00
Other payable		1,800.00
Drawings	1,500.00
Office equipment	3,500.00
Motor vehicle	60,000.00
Cash	3,700.00
Bank – Maybank	7,220.00
Accounts receivables	2,980.00
Service revenues		37,600.00
Administration expenses	750.00
Maintenance of vehicles	550.00
Petrol	1,050.00
Salaries and wages	2,850.00
Water and Electricity	300.00
	84,400.00	84,400.00

The following transactions occurred during the month of Dec:

Dec 1	Paid a shop rent for RM2,500.00 by cheque.
6	Received cash from clients for delivery services provided RM750.00.
7	Purchased additional office furniture on account from Naveen RM3,500.00. The business paid RM1,500.00 as a down payment by issuing a cheque and the balance will be paid after 60 days.
8	Received cash from clients for services provided RM1,450.00.
11	Paid cash for newspaper advertisement RM190.00.
12	Paid Naveen for debt incurred on Dec 7 by issuing a cheque.
15	Recorded services provided on account RM8,500.00 for William. Term: Payment made within 14 days entitled 5% discount.
15	Paid part-time receptionist for two weeks wages RM900.00 by cash.
15	Recorded cash received from Ali for service provided RM650.00.
20	Recorded services provided on account RM5,500.00 for Hassan. Term: Payment made within 14 days entitled 5% discount.
22	Received cash from clients for delivery services RM3,850.00.
25	Received cash from William for services rendered on Dec 15.
27	Paid utility bills RM550.00 cash.
29	Received cash from Hassan for services provided on Dec 20.
30	Paid part-time receptionist for two weeks wages RM900.00 cash.
30	Deposited money into a business bank account RM5,000.00.

Required:

1. Journalize the entries in the appropriate books of account.
2. Post the journal entries to the T-accounts and calculate the account balances.
3. Prepare a trial balance.
4. Prepare a Profit and Loss Statement for the month.
5. Prepare a Statement of Financial Position for the month.

Answer 1

a)

Journalize the entries in the appropriate books of account.

Date	Account Titles	Debit (RM)	Credit (RM)
Dec. 01	Rent Expense	2500
	Bank		2500
Dec. 06	Cash	750
	Service revenues		750
Dec. 07	Office Furniture	3500
	Cash		1500
	Accounts payable		2000
Dec. 08	Cash	1450
	Accounts Receivable		1450
Dec. 11	Advertisement Expense	190
	Cash		190
Dec. 12	Accounts payable	2000
	Bank		2000
Dec. 15	Accounts Receivable -william	8500
	Service revenues		8500
Dec. 15	Cash	650
	Service revenues		650
Dec. 20	Accounts Receivable -Hassan	5500
	Service revenues		5500
Dec. 22	Cash	3850
	Service revenues		3850
Dec. 25	Cash	8075
	Service discount [8500 × 5%]	425
	Accounts Receivable -william		8500
Dec. 27	Utility Expense	550
	Cash		550
Dec. 29	Cash	5225
	Service discount [5500 × 5%]	275
	Accounts Receivable -Hassan		5500
Dec. 30	Wages Expense	900
	Cash		900
Dec. 30	Bank	5000
	Cash		5000

___________________________________________________________

b)

Post the journal entries to the T-accounts and calculate the account balances.

______________________________________________________________________

c)

Prepare a trial balance.

Adjusted Trial Balance
Cash	15560
Bank	7720
Accounts receivable	1530
Office Equipment	3500
Office Furniture	3500
Motor vehicle	60000
Other payables		1800
Capital		45000
Drawings	1500
Service revenue		56850
Service discount	700
Rent Expense	2500
Salaries and wages expense	3750
Administration expense	750
Maintenance of vehicle expense	550
Petrol expense	1050
Water and electricity expense	300
Utility expense	550
Advertisement expense	190
	103650	103650

_______________________________________________________________

d)

Prepare a Profit and Loss Statement for the month.

________________________________________________________________

e)

Prepare a Statement of Financial Position for the month.

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