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Prepare the balance sheet/SOFP as at 31 December 2016.
Habib Sdn. Bhd. is a merchandising company which has business operations in Cyberjaya. The following balances have been extracted from the books as at 31 December 2016. 1. Closing inventories as at 31 December 2016 was valued at RM50,000. 2. Half of the interest on loan has not been paid for the year. 3. Depreciation was to be provided: Motor vehicles 10% on straight line method. Furniture 10% on reducing balance method. 4. Rental includes RM2,000 paid in advance.
Expert Answer
| First income statement is prepared and then Balance sheet. | |||
| INCOME STATEMENT | |||
| Sales | 980000 | ||
| Less: Return inwards | 2000 | ||
| Less: Discount allowed | 45000 | ||
| Net sales | 933000 | ||
| Cost of goods sold: | |||
| Beginning inventory | 117200 | ||
| Add: Purchases | 440000 | ||
| Add: Carriages inwards | 9600 | ||
| Total goods available for sale | 566800 | ||
| Less: Ending inventory | 50000 | ||
| Cost of goods sold | 516800 | ||
| Gross profit | 416200 | ||
| Less: Selling, general & administrative expenses: | |||
| Carriage outwards | 40000 | ||
| Salaries expense | 150000 | ||
| Rental expense (10000-2000 advance) | 8000 | ||
| Insurance expenses | 36000 | ||
| General expense | 91800 | ||
| Depreciation expense–Motor vehicles (240000*10%) | 24000 | ||
| Depreciation expense–Furniture (60000-11400)*10% | 4860 | 354660 | |
| Operating profit | 61540 | ||
| Other income/(expenses) | |||
| Interest expense (14000+350000*8%*1/2) | -28000 | ||
| Commission received | 5000 | -23000 | |
| Net income | 38540 | ||
| BALANCE SHEET | |||
| ASSETS: | |||
| Current assets: | |||
| Cash | 36000 | ||
| Accounts receivable | 122800 | ||
| Inventory | 50000 | ||
| Prepaid rent | 2000 | ||
| Total current assets | 210800 | ||
| Non current assets: | |||
| LT investments | 110000 | ||
| Land and building | 900000 | ||
| Motor vehicles | 240000 | ||
| Less: Accumulated depreciation (72000+24000) | 96000 | 144000 | |
| Furniture | 60000 | ||
| Less: Accumulated depreciation (11400+4860) | 16260 | 43740 | |
| Total non current assets | 1197740 | ||
| TOTAL ASSETS | 1408540 | ||
| LIABILITIES: | |||
| Current liabilities: | |||
| Accounts payable | 65000 | ||
| Interest payable | 14000 | ||
| Bank overdraft | 45000 | ||
| Total current liabilities | 124000 | ||
| Non-current liabilities: | |||
| Loan from CIMB | 350000 | ||
| Total liabilities | 474000 | ||
| Stockholders’ equity: | |||
| Common stock | 800000 | ||
| Retained earnings (156000+38540-60000) | 134540 | ||
| Total stock holders’ equity | 934540 | ||
| 1408540 | |||
