WORK SHEET

INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION

Q.1. The following Trial balance was extracted from the Books of Mega Enterprise as at 31
December 2020.
$ $
Capital 200,000
Duty on purchases 2,300
Insurance 6,000
Inventory as at 1 January 2020 70,000
Interest on loan 2,500
Account receivable and account payable 20,450 24,500
Purchase and sales 200,000 280,000
Land and building 265,550
Return inwards and return outwards 2,300 1,850
Accumulated depreciation – Office equipment 9,850
Accumulated depreciation – Motor vehicles 50,000
10% Loan from Hong Leong Bank 265,000
Cash 7,400
10% Fixed deposit 10,000
Discount allowed and discount received 2,500 5,000
Carriage outwards 8,200
Utilities 1,500
Bank 40,000
Office equipment 28,000
Salary and wages 25,000
Motor vehicles 140,000
Drawings 3,000
General expenses 3,500
Commissions 2,800 4,800
841,000 841,000

Additional information:
1. Inventory as at 31 December 2020 was valued at $40,000

2. Included in the carriage outwards is carriage inwards amounting to $1,320.

3. Depreciation for the year are to be provided as follows:

Office equipment Straight line method, 10% per annum
Motor vehicles Reducing balance method, 15% per annum

4. Fixed deposit was invested on 1 July 2020. The half year interest was not yet received.
5. One of the employees was given an advance salary of $700.

6. The owner took goods worth $2,000 and cash $1,500 for personal use.

7. The following expenses are still outstanding as at 31 December 2020.

General expenses $600
Utilities $250
 Required:
a) Prepare the Income Statement for the year ended 31 December 2020
b) Prepare the Statement of financial position as at 31 December 2020

Q.2. The following Trial Balance was extracted from the books of Smart Enterprise as at 31
December 2020.
Debit ($) Credit ($)

Purchases and Sales 97,500 150000

Discount allowed and discount received 400 750
Carriage inwards 550
Carriage outwards 300
Return inwards and return outwards 4,000 3,500
Inventory as at 1 January 2020 16,000
Advertising 1,250
Dividend received 300
Rental 3,000 3,900
Bad debt 1,800
Salary 9,000
Utilities 1,500
Insurance 2,000
Cash 2,600
Bank 7,600
Account receivables and account payables 50,000 68,500
Capital 154,950
Loan from Maybank 90,000
Freehold premises 200,000
Furniture 8,000
Motor vehicles 52,000
Investment 32,000
Accumulated depreciation – Furniture 3,200
Accumulated depreciation – Motor vehicles 15,600
Drawing 1,200
490,700 490,700
Additional information:
1. Inventory as at 31 December 2020 was valued at $52,000.
2. Rental received is for the period from 1 January 2020 to 31 March 2021.
3. $200 of utilities was paid in advance.
4. The owner had withdrawn $1,300 goods for his family use and no record was made.
5. Additional bad debts of $1,100 was to be written off.
6. Insurance amounting $1,000 was still outstanding at the end of the accounting period.
7. Depreciation is to be charged as follows:
i) Furniture - 20% per annum on cost, straight line method.
ii) Motor vehicles - $5,200 per year.
8. Interest on loan at 5% per annum has not been paid.
Required:
a) Prepare the income statement for the year ended 31 December 2020.
b) Prepare the statement of financial position as at 31 December 2020.

Q.3. The following balances have been extracted from the books of Alpha Berhad as at 31
December 2020.
Debit Credit
($) ($)
1,000,000
Land and Building
Furniture and Fixtures 600,000
Motor Vehicles 800,000
Accumulated Depreciation:
Motor Vehicles 216,800
5% Loan from CIMB 750,000

10% Fixed deposit at MAYBANK 100,000

Bank 120,000
Cash 50,000
Account payable 78,000
Inventories, 1 Jan 80,000

Account receivable 95,000

Dividend 180,000
Common stock/Share capital 1,500,000
Duty on purchase 40,000
Carriage inwards 12,000
Returns 4,500 7,000
Purchases and sales 460,000 870,000
Discounts 15,000 17,000
Salaries expenses 250,000
Repair and maintenance expenses 80,500
Commissions 16,000 26,000
Insurance expenses 24,000
Utilities 36,000
Rental received 40,000
General expenses 21,800
Retained earnings, 1 Jan 480,000

3,984,800
3,984,800

Additional information:
1. Closing inventories as at 31 December 2020 was valued at $120,000.
2. Interest on loan has been accrued for the year ended. The loan was taken on 1 March
2020.
3. Depreciation was to be provided:
 Furniture and Fixtures $2,500 per month.
Motor Vehicles 10% on reducing balance method.
4. Fixed deposit was invested on 1 July 2020. Interest on fixed deposit was still accrued for
2020.
5. Utilities outstanding amounted to $1,300 and insurance prepaid was $500.
6. The company collected a receivable from customer, $15,200, however the bookkeeper
recorded it at $12,500. This transaction has not been adjusted in the books of Alpha Berhad.

Required:
a. Prepare the income statement for the year ended 31 December 2020.
b. Prepare the statement of financial position as at 31 December 2020.

4. Clearwater Sdn. Bhd. is a merchandising company which has business operations in

Putrajaya. The following balances have been extracted from the books as at 31 December 2020.
Debit Credit
($) ($)
Land 900,000
Building 240,000
Machinery 60,000
Accumulated Depreciation:
Building 72,000
Machinery 11,400
7.5% Loan from Maybank, 10 Years 350,000
Bank overdraft 45,000
Cash 36,000
Account receivable 122,800
Inventories, 1 Jan 117,200
Account payable 65,000
Dividend 60,000
Common stock/Share capital 800,000
Supplies 110,000
Carriage outwards 40,000
Carriage inwards 9,600
Return inwards 2,000
Purchases and sales 440,000 980,000
Discount allowed 45,000
Salaries expenses 150,000
Bad debts 10,000
Prepaid insurance 36,000
Interest expenses 13,125
Telephone and internet charges 5,000
Rental and maintenance 36,000
General expenses 55,800
Retained earnings 165125
2488525 2488525
Additional information:
1. Closing inventories as at 31 December 2020 was valued at $50,000.
2. Account on supplies on 31 December 2020 revealed $60,000 worth still on hand.
Half of the interest on loan has not been paid for the year.
3. Commission received $15,000 has not been included and no entries had been recorded in
the books.
4. Depreciation was to be provided:
Building 2% on cost
Machinery 10% on reducing balance
5. Telephone and internet charges outstanding amounted to $1,300.
6. The prepaid insurance is for a 12-month policy purchased by cash on 1 March 2020. The
policy is effective from 1 March 2020.

Required:
a) Prepare the income statement for the year ended 31 December 2020.
b) Prepare the statement of financial position as at 31 December 2015.