Question & Answer: Prepare the balance sheet/SOFP as at 31 December 2016……

Prepare the balance sheet/SOFP as at 31 December 2016.

QUESTION 6 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 Land and building Motor vehicles Furniture Accumulated Depreciation (RM) 900,000 240,000 60,000 Motor vehicles Furniture 8% Loan from CIMB, 10 Years Bank overdraft Cash Account receivable Inventories, 1 Jan Account payable Dividend Common stock Investments (Long term) Carriage outwards Carriage inwards Return inwards Purchases Discount allowed Salaries expenses Rental expense Insurance Interest expenses Commission received Sales General expense Retained earnings, 1 Jan 72,000 11,400 350,000 45,000 36,000 122,800 117,200 65,000 60,000 800,000 110,000 40,000 9,600 2,000 440,000 45,000 150,000 10,000 36,000 14,000 5,000 980,000 91,800 156,000 Additional information: 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 Furniture 10% on straight line method. 10% on reducing balance method. 4. Rental includes RM2,000 paid in advance

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
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