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Question 1
Mr Chandra’s ledger accounts for the year ended 30th April 2016 showed the following balances:-
RM
Premises at cost
250,000
Machinery at cost
52,000
Provision for depreciation on machinery at 1 May 2015
15,600
Provision for doubtful debts at 1 May 2015 (Cr)
500
Sales
243,000
Purchases
184,000
Return inwards
2,040
Return outwards
1,980
Carriage inwards
350
Carriage outwards
800
Rent received
2,420
Discount allowed
1,800
Discount received
1,300
Electricity
2,100
General expenses
9,340
Stock at 1 May 2015
13,500
Debtors
9,000
Creditors
11,460
Bank balance overdrawn
8,260
Cash
990
Drawings
18,600
Long-term loan at 11% per annum
60,000
Capital 1May 2015
200,000
Additional information on 30 April 2016:
1. Stock was valued at RM15,100
2. No interest has been paid or provided for on the loan, which had been taken out on 1st November 2015
3. Mr Chandra’s tenant had paid only eleven month’s rent; one month’s rent was due and unpaid
4. Electricity paid for the period 1 May 2016 to 30th June 2016 amount to RM40
5. General expenses which was due and unpaid amounted to RM50
6. One of the debtors, Mr Phillo had passed away and the company decided to write-off his debts of RM200.
Depreciation was to be provided on machinery at 40% using the reducing balance method
Doubtful debts provision was to be 3% of debtors at the end of the year
Required:
a. Prepare Mr Chandra’s Income Statement for the year ended 30th April 2016
b. Prepare Mr Chandra’s Statement of Financial Position as at 30th April 2016
The post the reducing balance method appeared first on Scholar Writers.
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