Tutorial Adjustment

Financial Statement with Adjustments
Chapter 7 - FAR110rosmawati haron
Tutorial 1
Miss Erdyna is engaged in the sole proprietorship business. She is the owner of Dyna
Beauty Shop that sells varieties of skin care and cosmetic products. The following is the
shop’s trial balance as at 31 December 2017:
Dyna Beauty Shop
Trial Balance as at 31 December 2017
Accounts Title Debit Credit
(RM) (RM)
Delivery van 21,300
Furniture and fittings 18,700
Accounts receivable 36,900
Accounts payable 27,950
Purchases 79,500
Sales 196,300
Bank 24,500
Capital as at 1 January 2017 86,000
Transportation inwards 1,500
Advertising 16,000
Discounts 500 1,500
Drawing 6,500
Fixed deposit: EON Bank 20,000
Interest on fixed deposit: EON Bank 800
Inventory as at 1 January 2017 71,700
Accumulated depreciation as at 1 January 2017:
Delivery van 4,260
Returns 1,900 950
Stationery 4,100
Rental 10,200
Salaries 23,200
5% Loan from Public Bank 15,000
336,500 336,500
As her business expands, Miss Erdyna is facing some problems in preparing the shop’s book
of accounts. She is interested in hiring you as her Accounts Executive. She asked you
to prepare the financial statements based on the above trial balance and the following
additional information on 31 December 2017:
1. There was no closing inventory for the year as all products were sold out during the
year-end sales (YES) promotion campaign.
2. Only 80% of the advertising expenses paid during the year was for the year ended 31
December 2017.
3. Depreciation rate for non-current assets are as follows:
Delivery van 20% reducing balance method
Furniture and fittings 10% straight line method
1
4. Sales discount of RM200 was wrongly recorded in the stationery account.

5. Loan from Public Bank was taken on 1 March 2017. None of the interest was paid
during the year.
6. Salaries expenses amounting to RM1,800 were accrued while the rental expenses
was over paid by RM1,200.
7. Investment in fixed deposit with EON Bank was made on 1 April 2017. The interest
rate on the fixed deposit was 8% per annum.
Required:
a. Prepare the Statement of Profit or Loss and the Statement of Financial Position of the
business as at 31 December 2017.
b. Explain TWO (2) reasons why a company needs to prepare adjusting entries at the
end of an accounting period.
Tutorial 2
The following is the trial balance of Myron Enterprise as at 31 December 2018.
Myron Enterprise
Items Debit (RM) Credit (RM)
Purchases and Sales 180,200 273,000
Tax on Purchases 1,500
Cash in hand 3,520
Hire-purchase Loan 25,000
Rent payables and rent received 12,240 24,000
Capital 210,240
Accounts receivable and Account payable 35,060 60,000
Drawings 6,800
Returns 2,550 5,200
Machineries 27,500
Fixtures and Fittings 25,300
Accumumulated Depreciation:
Machineries 2,190
Fixtures and Fittings 5,060
Interest on Investment 1,180
Discounts 2,500 4,120
Carriage Inwards 6,400
Wages and Salaries 55,400
Investment 25,000
Interest on loan 8,000
Cash at BlueBank 141,520
Postage & Delivery 12,000
Utilities 16,500
TOTAL 609,990 609,990
2
The following adjustments are needed to be taken into account prior to preparing the
financial statements.
1. Inventory as at 31 December 2018 was RM52,000 and the business uses periodic
inventory system.
2. The interest declared for investment was 8% per annum in year 2018 and the
business made the investment on 31 March 2018.
3. The yearly depreciation rates for the business’s non-current assets are as follows:
Machineries 10% straight line method
Fixtures and Fittings 15% reducing balance method
4. On 30 June 2018, the owner has injected additional cash amounting of RM20,000 for
the business. The cash is deposited into the BlueBank on the next day.
5. Rental received includes RM2,000 of rental for January 2019.
6. The business delayed payment of year 2018 bonus to its employees amounted
RM4,000 to January 2019.
7. There was an overpayment utilities of RM109.
Required:
a. Prepare the Statement of Profit or Loss and the Statement of Financial Position for
Myron Enterprise as at 31 December 2018.
b. Referring to adjustment information number (7) above, explain the relevant
accounting concept to record the transaction.
Tutorial 3
The following is the trial balance of Alam Maju Enterprise as at 30 June 2019:
ALAM MAJU ENTERPRISE
Trial Balance as at 30 June 2019
Debit (RM) Credit (RM)
Cash 125,700
Accounts receivable and Accounts payable 6,800 8,200
Short term investment 20,000
Inventory – 1 July 2018 43,200
Vehicles insurance 3,600
Supplies expenses 12,500
Equipment 230,000
Accumulated depreciation – equipment 69,000
Motor vehicle 84,000
Accumulated depreciation – motor vehicle 50,400
Rent 2,500
Capital 209,400
Drawings 1,800
Returns 5,500 6,400
Dividend 1,000
3
Commissions 4,800
Utilities expense 14,500
Carriage inwards 6,800
Carriage outwards 3,500
Salaries and wages 62,000
Advertising 15,000
Miscellaneous expense 14,800
814,100 814,100
The following adjustments need to be considered for the preparation of financial statements
for the year:
1. Closing inventory as at 30 June 2019 was RM39,500.
2. Accrued utilities and advertising expenses were RM600 and RM2,000 respectively.
3. The vehicle insurance covers two-year premium from 1 July 2018 to 30 June 2020.
4. The business has earned commission income of RM1,800, but the amount was not
recorded yet.
5. Yearly depreciation rates for the company’s non-current assets are as follows:
Equipment 10% straight line method
Motor vehicle 20% reducing balance method
Required:
a. Prepare the Statement of Profit or Loss for the year ended 30 June 2019 and the
Statement of Financial Position as at that date.
b. Explain the difference between accrued revenue and prepaid revenue.
Tutorial 4
a. What is the impact of prepaid revenue in the statement of profit or loss?
b. Dioh Enterprise is selling groceries in Kuala Pilah. The following trial balance was
extracted from its books for the year ended 31 December 2020.
Dioh Enterprise
Trial Balances as at 31 December 2020
Capital 100,000
Accounts receivable and accounts payable 27,000 16,200
Cash in hand 17,740
Bank 16,400
Fixed deposit 20,000
Motor vehicles 70,000
Office equipment 20,000
Motor vehicle 7,000
4
Furniture and fittings 750

5% bank loan 60,000
Purchases and sales 76,600 140,000
Insurance 4,800
Rental expenses 10,000
Utilities 3,850
Duty on purchases 2,300
Drawings 560
Commissions 1,200 2,500
331,450 331,450
Additional information:
1. Inventory as at 31 December 2020 was valued at RM33,220.
2. One of the debtors has made return on the purchase she made amounting to RM250.
The transaction is yet to be recorded.
3. The following adjustment are to be considered for the period:
Accruals RM Prepayments RM
Salaries and wages 900 Insurance 800
Commission received 500
4. The business’s motor vehicle has broken down. The owner brought it to a service
center and paid RM620 using his own credit card.
5. Depreciation is to be provided as follows:
Non-Current Assets Method of Rate

Depreciation
Office equipment Reducing balance 10%
Motor vehicle Straight line 20%
Furniture & Fittings Staright line 5%
Required:
Prepare the statement of Profit or Loss for the year ended 31 December 2020, and the
statement of Financial Position as at 31 December 2020.
5
Tutorial 5
Below is the trial balance of Simba Enterprise as at 31 December 2020.
Simba Enterprise
Debit Credit
(RM) (RM)
Office furniture 20,000
Fixture and fittings 15,000
Accumulated depreciation as at 1 January
2020:
-Office furniture 4,000
-Fixture and fittings 3,000
Account receivables 18,600
Bank 18,500
Cash 2,000
Account payables 15,460
4% Short term loan 5,000
Sales 166,800
Sales return 1,200
Sales discount 440
Purchases 26,700
Carriage expenses 4,380
Purchase return 580
Purchases discount 600
Rental 36,000
Utilities 18,000
Advertisement 8,000
Miscellaneous expense 430
206,000 206,000
1. The closing inventory as at 31 December 2020 was RM12,300. The business
used periodic inventory system to record its inventory.
2. During the year, the owner took inventories worth RM700 for his personal use.
3. The depreciation policy was as below:
Office furniture – 10% per annum, straight line method
Fixture and fittings – 10% per annum, reducing balance method.
1. On 29 December, the business received commission for the month of January
2021 amounting to RM120.
1. Salaries and wages of RM2,000 for the month of December 2020 is not yet
paid.
6
1. From the total of carriage expenses, RM680 was carriage inwards.

1. The 4% short-term loan above was approved on 31 December 2020.
Required:
a. Prepare the Statement of Profit or Loss for the year ended 31 December 2020 and
Statement of Financial Position as at 31 December 2020.
b. Explain TWO (2) reasons of charging depreciation on non-current assets.
Tutorial 6
Puan Mira Edora owns a boutique, Pink Closet at Berjaya Mall. The boutique sells modern
and traditional costumes. The following trial balance was extracted from the book of Pink
Closet as at 30 June 2021.
PINK CLOSET
TRIAL BALANCE AS AT 30 JUNE 2021
DEBIT CREDIT
(RM) (RM)
Inventory as at 1 July 2020 20,000
Return inwards and Return outwards 2,000 3,000
Insurance on purchases 5,500
Commission received 2,800
Salary 16,500
Salesman commission 5,300
Dividend received 2,200
Interest expense 2,500
Delivery van 35,000
Costumes cabinet 30,000
Accumulated depreciation:
Delivery van 12,600
Insurance 19,000
Cash at bank 28,700
10% Loan from SME Bank 50,000
Drawings 300
Capital 31,300
288,600 288,600
1. The closing inventory as at 30 June 2021 was valued at RM16,000.
2. It is the policy of the company to provide annual depreciation as follows:
7
Costumes cabinet 10% straight line method

Office equipment 15% on cost
3. Commission received of RM4,500 was still owing.
4. One of the fashion designers was given an advance of two month’s salary.
The designer was paid RM2,200 per month.
5. Interest on loan from SME Bank for half a year was still outstanding.
6. RM200 of the dividend received was for the month of July 2021.
7. Puan Mira Edora withdraws cash RM650 and took a pair of baju kebaya
amounting to RM250 for her daughter’s birthday.
Required:
Statement of Financial Position as at 30 June 2021.
b. Prepare the journal entries for additional information no. (4) above. Narration is not
required.
Tutorial 7
a. When a business has made an advance payment for its electricity bill, what is the
appropriate journal entry for the transaction?
b. Ammar Enterprise specializes in selling kitchenware in Ayer Keroh. The following

balances are extracted from their books for the year ended 31 December 2019.
Ammar Enterprise
Capital 110,000
Shop premises at cost 71,500
Fixtures & fittings at cost 48,000
Motor vehicles at cost 15,000
Account receivables and account payables 40,920 30,250
Purchase and Sales 39,380 82,880
Cash in hand 19,800
Cash at bank 49,500
Returns 4,180 4,730
Inventories ( as at 1 January 2019 ) 31,020
Insurance on purchases of goods 1,100
10% Loan from Siti Bank 121,550
8% Fixed Deposit with WFO Bank 38,500
Rent and rates 1,980
Water and electricity 935
Stationery 1,100
8
Repairs and maintenance 1,485

Drawings 1,595
Interest on fixed deposit with WFO Bank 1,540
Accumulated depreciation ( as at 1 January
2019 ):
Shop premises 14,300
Fixtures & fittings 14,890
391,680 391,680
2. Loan from Siti Bank was taken on 1 July 2019. No interest has been paid on this loan
at the end of the accounting period.
Shop premises 10% on cost
Fixtures and fittings 10% on carrying amount
Motor vehicles 15% on cost
Salaries and wages 1,650 Insurance on purchase of 190
goods
Interest on fixed 1,540 Stationery 80
deposit
Water and electricity 125
5. Includes in the repair and maintenance is an amount RM450 paid for repairing owner’s
private car.
REQUIRED:
statement of Financial Position as at 31 December 2019. You need to upload your marks in
PDF format and please write your name and student ID on the answer sheet.
(Total: 20 marks)
Tutorial 8
a. What is the impact of prepaid revenue in the statement of profit or loss?
b. Dioh Enterprise is selling groceries in Kuala Pilah. The following trial balance was
extracted from its books for the year ended 31 December 2020.
Dioh Enterprise
Capital 100,000
9

Accounts receivable and accounts payable 27,000 16,200
Cash in hand 17,740
Bank 16,400
Fixed deposit 20,000
Motor vehicle 7,000
Furniture and fittings 750
5% bank loan 60,000
Purchases and sales 76,600 140,000
Insurance 4,800
Rental expenses 10,000
Utilities 3,850
Duty on purchases 2,300
Drawings 560
Commissions 1,200 2,500
331,450 331,450
2. One of the debtors has made return on the purchase she made amounting to RM250.
The transaction is yet to be recorded.

Salaries and wages 900 Insurance 800
4. The business’s motor vehicle has broken down. The owner brought it to a service
center and paid RM620 using his own credit card.

Non-Current Assets Method of Rate
Depreciation
Office equipment Reducing balance 10%
Motor vehicle Straight line 20%
Furniture & Fittings Staright line 5%
REQUIRED:
statement of Financial Position as at 31 December 2020.
(Total: 20 marks)
10
Tutorial 9
Below is the trial balance of Simba Enterprise as at 31 December 2020.
Simba Enterprise
Debit Credit
(RM) (RM)
Office furniture 20,000
Fixture and fittings 15,000
Accumulated depreciation as at 1 January
2020:
-Office furniture 4,000
-Fixture and fittings 3,000
Account receivables 18,600
Bank 18,500
Cash 2,000
Account payables 15,460
4% Short term loan 5,000
Sales 166,800
Sales return 1,200
Sales discount 440
Purchases 26,700
Carriage expenses 4,380
Purchase return 580
Purchases discount 600
Rental 36,000
Utilities 18,000
Advertisement 8,000
Miscellaneous expense 430
206,000 206,000
1. The closing inventory as at 31 December 2020 was RM12,300. The business used
periodic inventory system to record its inventory.
2. During the year, the owner took inventories worth RM700 for his personal use.
3. The depreciation policy was as below:
Office furniture – 10% per annum, straight line method
Fixture and fittings – 10% per annum, reducing balance method.
4. On 29 December, the business received commission for the month of January 2021
amounting to RM120.
5. Salaries and wages of RM2,000 for the month of December 2020 is not yet paid.
6. From the total of carriage expenses, RM680 was carriage inwards.
7. The 4% short-term loan above was approved on 31 December 2020.
11
Required:
Prepare the Statement of Profit or Loss for the year ended 31 December 2020 and
Statement of Financial Position as at 31 December 2020.
Tutorial 10
Puan Mira Edora owns a boutique, Pink Closet at Berjaya Mall. The boutique sells modern
and traditional costumes. The following trial balance was extracted from the book of Pink
Closet as at 30 June 2021.
PINK CLOSET
TRIAL BALANCE AS AT 30 JUNE 2021
DEBIT CREDIT
(RM) (RM)
Inventory as at 1 July 2020 20,000
Return inwards and Return outwards 2,000 3,000
Insurance on purchases 5,500
Commission received 2,800
Salary 16,500
Salesman commission 5,300
Dividend received 2,200
Interest expense 2,500
Delivery van 35,000
Accumulated depreciation:
Delivery van 12,600
Insurance 19,000
Cash at bank 28,700
10% Loan from SME Bank 50,000
Drawings 300
Capital 31,300
288,600 288,600
1. The closing inventory as at 30 June 2021 was valued at RM16,000.
2. It is the policy of the company to provide annual depreciation as follows:

Costumes cabinet 10% straight line method
Office equipment 15% on cost
3. Commission received of RM4,500 was still owing.
4. One of the fashion designers was given an advance of two month’s salary. The
designer was paid RM2,200 per month.
12
5. Interest on loan from SME Bank for half a year was still outstanding.
6. RM200 of the dividend received was for the month of July 2021.
7. Puan Mira Edora withdraws cash RM650 and took a pair of baju kebaya amounting to
RM250 for her daughter’s birthday.
REQUIRED:
Statement of Financial Position as at 30 June 2021.
b. Prepare the journal entries for additional information no. (4) above. Narration is not
required.
13

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Financial Statement with Adjustments

Chapter 7 - FAR110rosmawati haron

4. Sales discount of RM200 was wrongly recorded in the stationery account.

Furniture and fittings 750

3. The following adjustment are to be considered for the period:

5. Depreciation is to be provided as follows:

Non-Current Assets Method of Rate

1. From the total of carriage expenses, RM680 was carriage inwards.

1. The closing inventory as at 30 June 2021 was valued at RM16,000.

2. It is the policy of the company to provide annual depreciation as follows:

Delivery van 20% reducing balance method

Costumes cabinet 10% straight line method

b. Ammar Enterprise specializes in selling kitchenware in Ayer Keroh. The following

Repairs and maintenance 1,485

4. The following adjustment are to be considered for the period:

Inventory as at 1 January 2020 15,000

1. Inventory as at 31 December 2020 was valued at RM33,220.

3. The following adjustment are to be considered for the period:

5. Depreciation is to be provided as follows:

1. The closing inventory as at 30 June 2021 was valued at RM16,000.

2. It is the policy of the company to provide annual depreciation as follows:

Delivery van 20% reducing balance method

3. Commission received of RM4,500 was still owing.

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