Assignment Account 1

QUESTION 1

Rajoo

Statement of Comprehensive Income for the year ended 31 December 2014

RM RM RM

Sales Revenue 11,590

- Return inward 160

- Discount allowed 150

Net Sales 11280

Purchases 8940

- Discount received 350

- Return outward 180

Net Purchases 8410

+ Carriage inwards 500

Kos barang untuk dijual 8910

-Inventory 31 March 2500

Cost of Sales 6410

Gross Profit 4870

Plus: Interest received 850

- Rent income 450 1300 6170

Minus – Motor expenses 720

Carriage outward 200 920

Net Profit 5250

Rajoo

Statement of Financial Position as at 31 December 2014

RM RM RM

Non Current Assets

- Motor Vehicle 8000

Current Assets

Cash

Trade Receivables

Bank

Ending Inventory

1510

3870

4980

2500

12860

Current Liabilities

Trade payables 2910

2910

Working capital 9950

17,950

Owner’s Equity

Capital

Net profit

-Drawings

Non Current Liabilities

Loan

5500

5250

800

9950

8000

17,950

QUESTION 2

There are five types of important characteristics of a company which is:

1. Separate legal existence

A company has a separate legal entity independent from the members. It can own

property, and also make agreements in its own name. Shareholders are not the joint owners of

the company's property. A shareholder cannot be thought liable for the actions of the company.

There also can be contracts between a company and its members. A creditor of the company is

not a creditor of its members.

2. Limited liability

As a company has a separate legal entity, the members also cannot be held liable for

the debts of a company. The liability of every company member has limited towards nominal

value of the stakes bought by him or to the amount of guarantee given by him. However, if a

member of the company has desire, they may form a company with unlimited liability.

3. Transferability of shares

The capital of a company is divided into parts. Each and every part is called a share.

These shares are usually exchangeable. A stakeholder is able to draw his membership from the

company by moving his shares. But, in real practice some restrictions are placed on the transfer

of shares.

4. Separation of ownership and control

Members have no right to contribute directly in the everyday supervision of a company.

They select their representatives which called directors, who manage the company's affairs on

behalf of the members. Therefore, the proprietorship of a company is distributed among the

stockholders while the organization is assigned in the board of directors. The management of a

company is consolidated delegated.

5. Corporate finance

The share of a capital to a company is normally divided into a huge number of shares to

small value. These shares are obtained by a great number of people from different walks of life.

6. Perpetual Existence

A company is a constant form of business association. Its life does not depend upon the

loss, bankruptcy or retirement of any or all shareholder. Law creates it and law alone can

dissolve it. Members may be changing every time but the company can be going on for

life long. Therefore, a company has perpetual existence, regardless of changes in its

membership.

QUESTION 3

In the accounting, variable costing and absorption costing are two different methods

which are apply on the production costs which are used for product or service. The difference

among the two approaches is in the treatment of fixed manufacturing overhead costs.

Meanwhile the direct costing method, which is fixed manufacturing overhead costs are

expensed in the period which they are incurred. Under the full costing method,

Variable costing(Direct costing) Absorption cost(Full costing)

Fixed manufacturing costs are capacity costs

and will be incurred even if nothing is

produced.

Fixed manufacturing costs must be assigned

to products to properly match revenue and

costs.

Consistent with CVP analysis This costing does not support CVP

analysis because it essentially treats fixed

manufacturing overhead as a variable cost by

assigning a per unit amount of the fixed

overhead to each unit of production.

The full costing method applies all direct costs

and both fixed and variable manufacturing

overhead costs to the end product. All of these

costs move with the product through the

inventory accounts until the product is sold, at

which point they are expensed on the income

statement as costs of goods sold.

The manufacturing costs are absorbed by the

units produced. In other words, the cost of a

finished unit in inventory will include direct

materials, direct labor, and both variable and

fixed manufacturing overhead.

The direct costing method applies all direct

costs as well as variable manufacturing

overhead costs to the end product. These

costs move with the product through the

inventory accounts until the product is sold, at

Fixed manufacturing overhead costs are

expensed when the product is sold.

which point they are expensed on the income

statement as costs of goods sold. Fixed

manufacturing overhead costs are expensed

during the period in which they are incurred.

Net Operating income is closer to net cash

flow.

Easier to estimate profitability of products and

segments.

Difficulty to estimate profitability of products

and segments.

Profit is not affected by changes in inventories Profit is affected by changes in inventories

Impact of fixed costs on profit emphasized Does not impact the fixed costs on profit

emphasized

Variable costing is often useful for

management's decision-making.

Absorption costing is required for external

financial reporting and for income tax

reporting.

QUESTION 4

The dissolution of a partnership is the procedure during which the activities of the

partnership are spiral up which the ongoing nature of the partnership relation terminates. There

are some causes to dissolution a partnership such as, the mutual agreement of partners, where

by the entire partner agree for dissolution. The second cause is specific power in the

partnership agreement seeks dissolution and the majority agree for it. The third cause exercise

of a power in the legislation for example death or bankruptcy of a partner. The fourth cause is

any case of fraud, misrepresentation any or illegal activity. The fifth cause is order from court for

mental incapacity or other ill-health.

If any partners wish to transfer the assets and liabilities to a new partnership, It is open to

the ex-partners of the dissolved partnership to continue the business of the partnership whereby

they can use the original name. Meanwhile for assets and liabilities transfer they have to

undrawn profits and valued by the continuing partners. Whereby the business is continued

without any financial settlement and the departing partner is entitled to such share of the profits

as the court may find attributable to his/her share of the partnership assets.

QUESTION 5

Angela, Brenda, Christine and Hannah Partnership

Statement of Partners’ Capital for the year ended 31 May 2013

Capital Total Angela Brenda Christine Hannah

Partner withdrawal as

at 1 June 2012

1,090,000 500,000 260,000 330,000 -

Share of the goodwill 700,000 400,000

(4/7)

200,000

(2/7)

100,000

(1/7)

-

Property 350,000 200,000

(4/7)

100,000

(2/7)

50,000

(1/7)

-

2,140,000 1,1000,000 560,000 480,000 -

Credit capital debit

goodwill

Christine capital

converted to loan

(480,000) - - -

-

1,660,000 1,1000,000 560,000 480,000 -

Debit capital credit

goodwill

Written off goodwill (700,000)

(466, 667)

(4/6)

(233, 333)

(2/6)

-

-

960,000 633,33 326,667 - -


Partners’ Current Account

Capital Angela Brenda Christine Hannah

Balance B/D 60,000 40,000 10,000 -

Share of Profit Before

Admission of Hannah

100,000 50,000 25,000 -

After Admission of

Hannah

232,800 174,600 - 174,6000

Drawings (60,000) (50,000) (35,000) (30,000)

Balance B/F 332,800 21,460 - 144,000


Admission of Partner

Capital Total Angela Brenda Christine Hannah

Agreed Goodwill 700,000 466,667

(4/6)

233,333

(2/6)

- -

Old Profit sharing

among 2 partner

1660,000 1,1000,000 560,000 - -

Hannah

Capital – 250,000

Goodwill – 210,000

460,000 - - - 460,000

Written off goodwill (700,000) (280,000) (210,000) - (210,000)

New profit sharing

ratio

(4/10) (3/10) (3/10)

Sharing ratio 1,420,000 820,000 350,000 - 250,000


Share of Profit

1 June 2012 till 31 August 2012

Unadjusted profit 200,000

Bad debt incurred in June 2012 (25,000)

175,000

Share of profit

Angela (4/7) 100,000

Brenda (2/7) 50,000

Christine (1/7) 25,000

175,000


Profit for Full Year

RM RM

Net Profit 800,000

Bad debts (25,000)

Interest paid to Christine (18,000)

Share of Profit

Angela 100,000

Brenda 50,000

Christine 25,000 (175,000)

582,000

Share of Profits aft 1/9/12

Angela (4/10) 232,800

Brenda (3/10) 174,600

Christine ( 3/10) 174,600

582,000

QUESTION 6

Statement of Comprehensive Income for the year ended 31 March 2013

RM RM RM

Sales Revenue 618, 950

- Return inward 1450

- Discount allowed 1200

Net Sales 616,300

Inventory 52400

Purchases 496, 400

- Discount received 2040

Net Purchases 494, 360

+ Carriage on purchases 2700 497, 060

Kos barang untuk dijual 549, 460

-Inventory 31 March 58,900

Cost of Sales 490, 560

Gross Profit 125, 740

- Expenses

Bank interest 290

Wages & Salaries 40900

Rent & Rates 9400

Delivery expenses 12100

Heat & Light 1900

Interest on bank Overdraft 110

Provision for bad debts (500)

Write off debt 700

Depreciated on Furniture &

Fittings

400 65, 300

Net Profit 60,440

Statement of Appropriation as at 31 March 2013

Net Profit 60,440

- Expenses reimburse to partners

Bary : 900

Sean : 1300 (2,200)

58,240

Profit sharing

1st half of the financial year

Bary : 5/8 × 58,240 × 6/12 months

Sean : 3/8 × 58,240 × 6/12 months

(18,200)

(10,920)

Profit sharing2nd half of the financial year

Bary : 1/2 × 58,240 × 6/12 months

Sean : 1/2 × 58,240 × 6/12 months

(14,560)

(14,560)

-

Bary and Sean

Statement of Financial Position as at 31 March 2013

RM RM RM

Non Current Assets

Furniture and Fittings

- Depreciated of

Furniture

8000

(400)

7600

Current Assets

Cash

Trade Receivables

-Provision for bad

debts

Inventory

36500

(2000)

300

34500

58,900

93,700

Current Liabilities

Interest Accrued

Overdraft bank

Trade payables

110

8,130

50,620

58860

Working capital 34840

42,440

Owner’s Equity

Capital :

Barry

Sean

Current account:

Barry

Sean

25,000

15,000

660

1780 42, 440

Assignment Account 1

Documents

Transcript of Assignment Account 1