Question

he following balances were extracted from the books of Meena Gallery, selling gifts,
souvenirs and antiques for the year ended 31 December 2019:

Debit (RM) Credit (RM)
Capital 245,530
5% bank loan 109,000
Building 150,000
Motor vehicles 80,000
Office equipment 60,000
Accumulated depreciation as at 1 January 2019:
Motor Vehicle 40,000
Office equipment 8,000
Commission received 6,800
Rental income 4,800
Accounts receivables and accounts payables 40,000 34,500
Purchases returns and sales returns 15,000 8,000
Purchases and sales 150,000 350,000
Allowance for doubtful debt 1,000
Bank 58,750
Cash 44,550
Insurance 43,000
Fixed deposits 55,000
Carriage inwards 7,100
Inventory as at 1 January 2019 42,400
Water and electricity 9,230
Telephone and internet 3,700
Salaries and wages 32,400
Advertising expenses 16,500

807,630 807,630

Additional information:
1. Closing inventory as at 31 December 2019 was RM35,000.
2. Current year depreciation was provided as follows:
Motor vehicle : 10% per annum on straight line method
Office equipment : 20% per annum on reducing balance method
3. The amount of bad debt needed to be written off for the period was RM500. The allowance
for doubtful debts was to be adjusted at 4% on net accounts receivable using the allowance
method.
4. Accruals and prepayments at the end of the accounting period were as follows:
Accruals Prepayments

RM RM
Salaries and wages 1,800 Electricity expense 800
Advertising expense 7,000 Rental income 2,000
Interest on bank loan 5,450 Insurance expense 3,000
5. Fixed deposit was made on 1 July 2019 with an interest rate of 10% per annum. The
interest on fixed deposit was accrued at the end of the accounting period.
6. Puan Ameena, the owner of Meena Gallery took a set of Chinese antique porcelain worth
RM1,200 to be given to her sister as a wedding gift.
Required:
a. The Statement of Profit or Loss for the year ended 31 December 2019.

b. The Statement of Financial Position as at 31 December 2019.

Answer 1

Workings: