Fadhil Consultancy and Training



ACC2231: FINANCIAL ACCOUNTING

GROUP ASSIGNMENT

EPISODE I – The Enemy Within

Three siblings namely Aku Kira, Engkau Kira and Kita Kira are the sons of Datuk Kira Saja bin Lebai Kedekut and Datin Congak binti Imam Bakhil. They are in partnership having businesses almost everywhere. They owned a calculator factory, a departmental store and a luxury club. All details regarding the businesses are described in each of the episodes below.

You are required to form a group with maximum members of four and minimum of two persons in a group. The objectives are to solve the case study one by one taking into consideration every episodes might link to one another. The deadline for this assignment is 23 October 2017 preferably typed. Learn how to use MS Excel or any spreadsheets softwares. Late submission will not be entertained and the assignment might end up in the trash can.

Good luck!

EPISODE II – The Unruly Allocation

Kira Jadi Sdn Bhd is one of the business own by Kira Sama-Sama. The factory operating at Kampung Angka produces a financial calculator with the brand name “KiraBalance”. Aku Kira is in charge of the factory is busy preparing the accounts for the year ended 31 December 2017.

RM

Inventory as at 1 January 2017

Raw materials 31,700

Work-in-progress 31,800

Finished goods 21,260

Purchase of raw materials 79,475

Carriage on raw materials 2,790

Direct labour 85,276

Office salaries 33,419

Rent 20,000

Electricity and water 9,820

Depreciation: Machine 10,500

Office equipment 2,300

Sales 328,812

Factory fuel and power 10,120

While preparing the statement, Puan Bilang the management accountant propose the apportionment of certain cost to differentiate the factory account with the final account. The cost apportionment is as below;

Factory ¾, Office ¼ for rent and electricity and water.

The closing inventory as at 31 December 2017

Raw materials 29,870

Work-in-progress 27,900

Finished goods 29,840

Required;

a) Prepare a Manufacturing Account for the year ended 31 December 2017.

b) Income Statement for the year ended 31 December 2917.

EPISODE III – The Money for Nothing

In heart of Metrofulus, Kira Sama-Sama owns a departmental store known as The Jumlah adjacent to the popular Takel Store. Engkau Kira is in charge of The Jumlah and is also busy preparing the financial statement for the business. This is because, he has the obligation to honour the agreement made earlier to the partnership. Thirty percent of the profit from The Jumlah has to be submitted to the club owned by the partnership. The detail of the business is as below;

| |Apparels |Households |Electronics |

| |RM |RM |RM |

|Opening inventory | 20,000 | 24,000 | 36,000 |

|Purchases | 44,000 | 88,000 | 132,000 |

|Accounts receivables | 10,000 | 10,000 | 15,000 |

|Sales | 90,000 | 135,000 | 180,000 |

|Closing inventory | 21,000 | 17,500 | 45,000 |

|Value of furniture in each department | 10,000 | 20,000 | 20,000 |

|Floor space occupied by each department (sq ft) | 2,000 | 2,500 | 3,000 |

|Number of employees in each department | 15 | 20 | 25 |

|Electricity consumed by each department (units) | 100 | 200 | 300 |

The balances of other revenue items in the books for the year are given below:

| | RM |

|Carriage inwards | 3,000 |

|Carriage outwards | 2,700 |

|Salaries | 48,000 |

|Advertisement | 2,700 |

|Discount allowed | 2,250 |

|Discount received | 1,800 |

|Rent, rates and taxes | 7,500 |

|Depreciation of furniture | 1,000 |

|Electricity expenses | 3,000 |

|Staff welfare | 2,400 |

Note:

a) Provision for bad debts for the year is allocated at 5% of the accounts receivables.

b) The rest of the expenses will be allocated accordingly.

c) The Jumlah had to set aside RM5,000 in order to pay protection monies to Abang Long Fadhil. The balance will be distributed as per agreement.

Required;

Departmental Trading, Profit and Loss Account for the year ended 31 December 2017.

EPISODE IV – The Jackpot

Kira Sama-Sama also owns a luxury club by the name Kelab Klub Klib. The club has been in operation since 2010 and had grown into a huge complex in the Jumlah district. The club’s manager is Kita Kira and assist by his young personal assistant, Siti Sifir.

Under the Kelab Klub Klib, there are 3 revenue earning division namely, Suites, Spa and FineDine. The accounting operation of these three divisions is being done centrally. Below is the information pertaining to the mentioned businesses.

|Kelab Klub Klib |

|Receipts and Payment Accounts For The Year Ended 31 December 2017 |

|Balance b/d | 36,825 |Electricity | 8,450 |

|Debtors - spa | 23,690 |Rental | 26,000 |

|Club fee | 36,000 |Acquisition of FineDine utensils | 16,210 |

|Sales - FineDine | 64,374 |Wages | 26,800 |

|Spa Seminar - KauPutih | 11,000 |Refreshments | 10,840 |

|Comission | 960 |Creditors - suites | 17,350 |

|FineDine Open Day | 19,628 |Insurance | 1,800 |

|Debtors - Suites | 48,480 |Inventory purchases - FineDine | 25,528 |

|Sales - Spa | 31,275 |Advertisements | 10,600 |

|Debtor - FineDine | 9,940 |Cleaning services | 18,000 |

|Recycle scrap - Club | 3,468 |Staff training - Club | 6,000 |

|Donation for Campaign | |Staff training - Suites | 5,400 |

| - 'Pandaikan Yang Bodoh' | 10,000 |Staff training - Spa | 4,800 |

|Suites Promotion Sales | 188,800 |Staff training - FineDine | 6,000 |

|Donation from public | 7,340 |Acquisition of suites beds | 12,500 |

|Hi-Tea - FineDine | 16,920 |Salary | 120,000 |

| |  |Inventory purchases - Spa | 14,710 |

| |  |Expenses for Campaign | |

| |  | - 'Pandaikan Yang Bodoh' | 13,980 |

| |  |Merdeka Suites promotion | 6,340 |

| |  |Acquisition of Club van | 85,000 |

| |  |Creditors - FineDine | 18,623 |

| |  |Stationeries | 3,816 |

| |  |Maintenance on suites | 6,180 |

| |  |Creditors - Spa | 7,370 |

| |  |Cost of sales - Suites | 14,980 |

| |  |Transportation | 9,220 |

| |  |Spa Kau Putih Seminar cost | 4,360 |

| |  |Inventory purchases - Suites |1,014 |

| | |Carriage inwards - FineDine |2,782 |

| | |Carriage inwards - Suites |4,050 |

| |  |Balance c/d | (3) |

| | 508,700 | | 508,700 |

However, there are few items need to be adjusted before presenting the report to the Club Council that led by their father, Datuk Kira Saja. Some of the items need to be apportioned as below;

Additional information regarding the three divisions are as below;

| | | |2016 |2017 |

|Inventory - Suites |1,320 |1,862 |

|Inventory - Spa |6,340 |5,991 |

|Inventory - FineDine |5,178 |6,243 |

|Debtor - Suites |17,425 |16,458 |

|Debtor - Spa |2,860 |4,553 |

|Debtor - FineDine |1,761 |2,448 |

|Creditors - Suites |3,684 |2,457 |

|Creditors - Spa |2,451 |3,285 |

|Creditors - FineDine |4,820 |3,860 |

|Accrued electricity |200 |220 |

|Prepaid rental |0 |2,000 |

|Accrued wages |500 |700 |

|Accrued club fee |4,200 |2,800 |

a) Purchases return was not recorded for Spa Division amounting to RM975.

b) The other related expenses are calculated based on the basis below;

| | |Club |Suites |Spa |FineDine |

|No of employees |2 |6 |4 |8 |

|Square area (ft) |1000 |10000 |3000 |6000 |

|Advertisement |2 |4 |1 |1 |

|Salary |3 |1 |1 |1 |

|Transportation |2,400 |3,600 |220 |3,000 |

| | | | | | |

c) Wages, refreshment, insurance and stationeries are apportioned according to number of employees.

d) Electricity, rental and cleaning are based on the square area.

e) The commission of RM960 is meant for the club being an organizer for an awareness program “Jangan Tikam Nombor”.

f) Depreciation for the newly acquired van is set at 20% at cost.

Required;

Income and Expenditure Account for the year ended 31 December 2017.

EPISODE V – The Wrong Count and Calculation

The father of the siblings Datuk Kira Saja bin Lebai Kedekut has made a number of decisions and was further seconded by their mother Datin Congak binti Imam Bakhil. Though, these decisions were not actually agreed by Aku, Engkau and Kita but they had to follow and obey as they always keeping in mind that their parents are the best decision maker and it is their stairway to heaven. Among the decisions are;

i. Aku had to get married before June 2018 or else he would not inherited any of his parents’ estates.

ii. Bonus of RM20,000 to be declared for 2017 to Kira Jadi Sdn Bhd and had to be settled before 31 December 2017. The payment to be issued from Kira Jadi Sdn Bhd

iii. Datuk Kira Saja had pledged to contribute to the orphanage a donation of RM5,000 in 2018.

iv. A consultation fee of RM15,000 should be paid to Datuk Kira Saja bin Lebai Kedekut for 2017 consultation fee. The payment to be issued from Kelab Klub Klib in December 2017.

v. Engkau salary will be raised to RM50,000 instead of RM48,000 starting January 2018.

vi. Starting from 2017, every year Datin Congak binti Imam Bakhil will prepare few short quizzes for her children to be more skilful in accounting.

EPISODE VI – The Riddle

Below are the trial balance of Kira Wang Anda Enterprise as at 31 December 2016 which recorded unbalanced figure of RM76,100.

| |Dr |Cr |

|Sales | | 440,000 |

|Purchases | 178,000 | |

|Salary and Wages | 82,000 | |

|Insurance | 4,000 | |

|Rental | 12,000 | |

|Telephone and Internet | 4,200 | |

|Motor vehicle maintenance | 6,800 | |

|Electricity and water | 2,400 | |

|Transportation expenses | 9,800 | |

|Discount allowed | 2,800 | |

|Bad debt | 4,000 | |

|Depreciation | 18,000 | |

|Motor vehicle | 90,000 | |

|Fixtures and Fittings | 32,000 | |

|Accounts receivables | 37,600 | |

|Inventory | 27,000 | |

|Bank | 75,000 | |

|Cash | 21,000 | |

|Prepayment | 19,800 | |

|Accounts payables | | 33,200 |

|Accruals | | 17,000 |

|Capital | | 60,000 |

|Suspense | | 76,100 |

| | 626,400 | 626,400 |

The following errors had been discovered during an audit exercise;

i. Actual sales should be recorded as RM480,000.

ii. Purchases were overstated by RM18,000.

iii. Payment by cheque from a debtor was omitted from both books amounting to RM1,400.

iv. Motor vehicle maintenance of RM500 was mistakenly debited in motor vehicle account.

v. Electricity and water expenses was prepaid RM700.

vi. Rental account was understated by RM3,000.

vii. Discount allowed was overstated by RM800.

viii. Transportation expenses was over-recorded as RM3,800. The correct amount was RM3,500.

Required;

a) Journalise all the above transactions.

b) Draw a suspense account.

c) Identify any two (2) errors from the above transactions.

d) Draw a new trial balance after all the corrections have been made.

e) If the total net profit for the year was RM41,900, draw the statement of corrected net profit to reflect the recent events.

EPISODE VII – The Partner in Crime

Aku Kira, Engkau Kira and Kita Kira business is always been a partnership as they are siblings. After spending a great amount of time managing several businesses under the spectrum of Datuk Kira and this year they decided to disclose the real accounts to the authority for the tax purpose. Below is the trial balance for their business for the period ending 31 December 2017.

| | | | |Dr |Cr |

|Sales and Purchases | 102,400 | 453,660 |

|Returns | 3,260 | 1,285 |

|Discounts | 2,380 | 1,860 |

|Electricity | 9,880 | |

|Rental | 36,000 | |

|Salary of partners | | |

| - Aku Kira | 50,000 | |

| - Engkau Kira | 48,000 | |

| - Kita Kira | | | | 52,000 | |

|Drawings | | |

| - Aku Kira | | | | 13,800 | |

| - Engkau Kira | | | | 15,600 | |

| - Kita Kira | | | | 9,800 | |

|Staff salaries | | | | 34,000 | |

|Motor vehicle at cost - allocated to Aku Kira | 118,294 | |

|Motor vehicle at cost - allocated by Engkau Kira | 113,873 | |

|Motor vehicle at cost - allocated by Kita Kira | 113,299 | |

|Cash | | | | 18,730 | |

|Bank | | | | 48,755 | |

|Inventory 1 January 2017 | | | 16,931 | |

|Accounts receivables | | | 34,738 | |

|Current account | | | | | |

| - Aku Kira | | | | | 2,840 |

| - Engkau Kira | | | | | 3,874 |

| - Kita Kira | | | | | 3,221 |

|Loan to partners | | | | |

| - Aku Kira | | | | 50,000 | |

| - Engkau Kira | | | | 30,000 | |

| - Kita Kira | | | | 45,000 | |

|Capital | | | | | |

| - Aku Kira | | | | | 150,000 |

| - Engkau Kira | | | | | 250,000 |

| - Kita Kira | | | | | 100,000 |

| | | | | 966,740 | 966,740 |

Additional information regarding the partnership as at 31 December 2017;

i) Closing inventory is RM14,264

ii) Profit sharing between partners is agreed according to their capital contribution.

iii) Interest levied on drawings is 8% per annum.

iv) Interest on capital contributed by partners is at 5% per annum.

v) Loan made by partners are charged at a flat rate of RM200 for every RM5,000 each.

Required;

a) Prepare Statement of Profit and Loss for the year ended 31 December 2017.

b) Prepare Profit and Loss Appropriation Account for the partnership for the period ending 31 December 2017.

c) Construct the current account for both partners.

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