BBM206/03 Accounting and Costing Course Assignment
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Question 1
a. Describe the difference between depreciation and (5 marks)
b. Outline the accounting entries required when plant assets are disposed by a company. (10 marks)
Question 2
Style photo sells only one product. The statement of comprehensive income for 2021 is provided below:
Sales | 60,000 |
Less variable expenses | (30,000) |
Contribution margin | 30,000 |
Less fixed expenses | (22,500) |
Net income | 7,500 |
Required:
Calculate with workings:
a. The contribution margin ratio in (3 marks)
b. The breakeven point in total sales (3 marks)
c. The sales in RM if the company wants to achieve RM40,000 in net income. (4 marks)
d. The increase in net income if sales increase by RM50,000. (3 marks)
e. The contribution margin in RM if there is no change in fixed and variable (2 marks)
Question 3
The following are the ledger balances for Elle Cosmetic as at 30 June 2021:
RM | |
Sales | 44,450 |
Opening inventory | 7,000 |
Purchases | 38,600 |
Carriage inwards | 480 |
Salaries | 6,500 |
Rents | 600 |
Discount Allowed | 200 |
Repairs and maintenance | 2,000 |
Insurance (for 8 months only) | 160 |
Stationery | 100 |
Commissions paid | 260 |
Interest expense | 240 |
General Expenses | 120 |
Office Equipment | 4,400 |
Bank Overdraft | 600 |
Accounts Receivable | 6,800 |
Provision for Doubtful Debts | 200 |
Accounts Payables | 3,200 |
Mortgage | 2,000 |
Capital | 17,010 |
Below is the additional information which was left out by the accounts clerk.
- The closing inventory as at 30 June 2021 was RM7,400.
- Prepaid rents were RM60.
- Insurance expenses unpaid for 4 months was RM80.
- Accrued salaries were RM150.
- Depreciation on equipment: 10% on cost.
- The provision for doubtful debts is to be made equal to 6% of the Accounts Receivables.
Required:
Prepare:
a. The Statement of Comprehensive Income for the year ended 30 June 2021. (8 marks)
b. The Statement of Financial Position as at 30 June 2021. (7 marks)
Question 4
The following information is taken from Tanaka Bhd for the year ended 31 December 2020.
Preference dividend declared and fully paid in 2020: RM100,000
Ordinary dividend declared and fully paid in 2020: RM3,960,000
Preference share marketable price per unit at 31 December 2020: RM4.60
Ordinary share marketable price per unit at 31 December 2020: RM9.00
Tanaka Bhd | ||
Statement of Comprehensive Income for the year ended 31 December | ||
2020 | ||
RM’000 | ||
Sales | 100,000 | |
Less: Cost of sales | (65,000) | |
Gross profit | 35,000 | |
Less: Expenses | ||
Marketing expenses | (13,000) | |
Administration expenses | (9,200) | |
Finance expenses | (2,880) | (25,080) |
Operating profit before tax | 9.920 | |
Taxation | (3,472) | |
Operating profit after tax | 6,448 | |
Tanaka Bhd | ||
Statement of Financial Position as at 31 December | ||
2020 | 2019 | |
Non-current assets | RM’000 | RM’000 |
Furniture (Net book value) | 31,840 | 29,200 |
Current assets | ||
Cash at bank | 2,448 | 3,520 |
Inventory | 13,000 | 13,200 |
Accounts receivable | 7,600 | 7,000 |
Quoted shares | 600 | 500 |
23,648 | 24,220 | |
Current liabilities | ||
Accounts payable | 10,400 | 10,920 |
Accruals | 300 | 500 |
10,700 | 11,420 | |
Working capital | 12,948 | 12,800 |
Non-current liabilities | ||
Long term loan | 18,400 | 18,000 |
Net assets | 26,388 | 24,000 |
Shareholder’s equity | ||
14.4 million ordinary shares | 14,400 | 14,400 |
500,000 9% preference share | 1,000 | 1,000 |
Retained profits | 10,988 | 8,600 |
26,388 | 24,000 |
Required:
a. Calculate the following ratio for 2020: Industry average ratio
Current ratio 3 : 1
Quick ratio 1 : 1
Asset turnover 2. 0
Profit margin 4.0%
Earnings per share RM0.46
Rate of return on total assets 11.0%
Assumption: all sales in credit; finance expense means interest; ordinary share outstanding throughout both years = 10,000,000 shares. (6 marks)
b. From the industry average, identify and comment on Tanaka Bhd’s profitability and short- term (9 marks)
Question 5
Sedunia Berhad was incorporated on 1 July 2020. On 1 August, it decided to issue 300,000 ordinary shares on the following terms:
Application RM1 per share
Allotment RM2 per share
Call as required RM1 per share
To the end of August, applications for 350,000 shares had been received together with the application money due on each share. One applicant for 5,000 shares had forwarded RM20,000 in full payment of the shares.
On 15 September, the directors proceeded to allot 300,000 ordinary shares on the following basis. Applicants for 30,000 shares were refunded their application money in full, 5,000 shares were allotted to the applicant who paid for the shares in full, and the other successful applicants were allotted the remaining shares, excess application money being transferred to allotment.
On 7 October, all allotment money had been received.
A first and final call was made on 1 November, and all call money was received by 30 November with the exception of the amount due on 6,000 shares.
Required:
- Prepare journal entries to record the above Narrations are required. (30 marks)
- Explain what is meant by oversubscription and the measures that a company can take under this situation. (10 marks)
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