ASSIGNMENT BBM206/03 Accounting and Costing

Question 1

Sejati Bhd buys a new machinery for RM10,000 on 1 January 2018. The machinery is estimated to be used for 5 years. After exactly 3 years, however, the machinery is suddenly sold for RM5,000. Sejati Bhd always provide a full year’s depreciation in the year when assets are purchased and no depreciation in the year when assets are disposed.

Required:

Prepare the accumulated depreciation for machinery accounts and machinery disposal accounts for years 2018, 2019 and 2020:

1. Using the straight-line depreciation method (assume 20% p.a.).             (7 marks)

2. Using the reducing balance depreciation method (assume 40% p.a.).    (8 marks)

Question 2 

Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows:

Statements of

Comprehensive

Net profit                               

…3/-

                                                             Company A                           Company B   

                                                                RM          RM                       RM          RM   

Statements of

Financial

Total Asset                            

Accumulated  profits                                        20,000                

                                                                       80,000                

Payables                                                    

Total Capital and reserves                             120,000                

Required:

1. Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio:

1. 1. Gross Profit Margin
   2. Net Profit Margin
   3. Inventory Turnover Period (days)
   4. Receivables Collection Period (days)
   5. Payables Payment Period (days)
   6. Current Ratio vii.     Quick Ratio

                (8 marks) 

2. Comment on each of the ratios calculated in part (a) above.                   (7 marks)

…4/-                

Question 3 

Success Sdn Bhd sells lorries. During the current year, 100 lorries were sold resulting in RM820,000 of sales revenue, RM250,000 of variable costs, and RM342,000 of fixed costs.

Required:

Calculate

1. the number of lorries that must be sold to achieve RM300,000 of operating

income.                                                                                                 (7 marks)

2. the contribution margin at the breakeven point of 2,000 units, variable costs total RM4,000 and fixed costs total RM6,000.                                      (4 marks)

3. Explain the term breakeven point.                                                        (4 marks)

Question 4  

John, Lee and Tony are in partnership, preparing accounts to 31 October each year. Their partnership agreement states that:

1. The partners are entitled to 5% per annum interest on their opening capital accounts. No interest is allowed (or charged) on current account balances.

2. Interest is charged on the partners' drawings at 7% per annum. Their drawings during the year to 31 October 2020 were as follows:

                                                       John                       RM30,000

                                                       Lee                        RM20,000

                                                       Tony                      RM3,000

3. Partners' annual salaries are RM6,000 and RM 12,000 for Lee and Tony respectively.

4. Remaining profits and losses are shared between John, Lee and Tony in the ratio of 5:4:1.

…5/-

5. The partners' capital and current account balances as at 1 November 2019 are as follows:

                                                                   Capital a/c          Current a/c

                                                                   RM                     RM

                                            John               50,000                16,320 Cr

                                            Lee                 30,000                1,110 Cr

                                            Tony               10,000                (590) Dr

The capital account balances remained unchanged during the year to 31 October     2020.

6. The partnership's net profit for the year to 31 October 2020 is RM81,961.

Required:

1. Prepare a profit distribution account for the year ended 31 October 2020.

                                                                                                                (10 marks)

2. Prepare the partners' current accounts (in columnar form) for the year to 31

October 2020.                                                                                            (5 marks)

c.         

(Note: All the figures must be rounded up to the nearest RM)  

…6/-

Question 5 

The following is the Trial Balance of Maple Union Berhad at 31 December 2020.

…7/-

The following additional information are available:

1. Inventory at 31 December 2020 is valued at RM13,000.
2. Rates and insurance are prepaid by RM1,500. iii. Wages of RM400 is owed. iv. The allowance for doubtful debts is fixed at 4% of trade receivable balances. 

      Bad debts of RM500 is to be written off.

v. Rent of RM400 is due but yet to be paid. vi. Long term loan interest is 10% per annum. vii. Depreciation of motor vehicles and furniture & equipment are based on 15% per      annum on cost. Machinery is depreciated at 15% per annum on reducing balance      method. viii. The director proposed a final ordinary dividend of 10%.

ix. The proposed corporate tax rate is 30%.

Required:

Prepare:

1. the Statement of Comprehensive Income for the year ended 31 December

2020.                                                                                          (25 marks)

2. the Statement of Financial Position as at 31 December 2020.  (15 marks)

END OF QUESTION PAPER