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

a.)	S.No.	Account Titles	Debit RM	Credit RM
	(i)	Insurance Expense	2,000
		Prepaid insurance		2,000
	(ii)	Bad Debt Expense	200
		Allowance for Doubtful Debt Account		200
		(40,000 x 5% ) - 1,800
	(iii)	Depreciation Expense	10,500
		Accumulated Depreciation -Equipment		10,500
		(105,000 x 10% )
	(iv)	Interest Receivable	350
		Interest revenue		350
		(7,000 x 5% )
	(v)	Prepaid Rent	5,400
		Rent Expense		5,400
	(vi)	Salaries and wages expense	5,800
		Salaries and wages payable		5,800
	(vii)	Prepaid Advertising	560
		Advertising Expense		560

b.)	Amanah Berhad
	Income Statement
	Year Ended December 31,2020
		Amount in RM
	Revenue:
	Sales Revenue	260,000
	Interest Revenue	350
	Total revenue	260,350
	less: Expenses:
	Cost of Goods sold	111,000
	Salary & wages Expense ( 50,000 + 5,800 )	55,800
	Insurance Expense	2,000
	Bad Debt Expense	200
	Depreciation expense	10,500
	Rent Expense ( 12,800 - 5,400 )	7,400
	Advertising Expense ( 5,360 - 560 )	4,800
	Net Income (loss)	68,650
2.)	Amanah Berhad Balance Sheet at December 31,2020
	Assets	Amount in RM
	Non-current assets
	Equipment , Net of Depreciation	79,500
	( 105,000 - 15,000 - 10,500 )
	Current assets
	Cash	12,000
	Accounts Receivables (net of allowance )	38,000
	( 40,000 - 1,800 - 200 )
	Notes Receivable	7,000
	Interest receivable	350
	Prepaid Insurance ( 4,800 - 2,000 )	2,800
	Prepaid Rent	5,400
	Prepaid Advertising	560
	Inventory	44,000
	Total Assets	89,610
	Equity & Liabilities
	Equity
	Share Capital -ordinary	44,000
	Retained Earnings ( 60,360 + 68,650 )	129,010
	Current Liabilities
	Accounts Payable	10,800
	Salaries Payable	5,800
	Total Equity & Liabilities	189,610
		-