Question

On 1 January 2021 Mr Lim started Mega Enterprise with the following:

	RM
Cash in bank	6,800
Premise	90.000
Equipment	3,700
Furniture &   Fittings	500

 

Mr Lim does not have a proper accounting record for the business. The following information is available as at 31 December 2021.

	RM
Cash in bank	7,5060
Premise	90.000
Equipment	6,200
Furniture &   Fittings	500
Fixed Deposit	5,000
Stock	11,780
Debtor	6,540
Creditors	3,602
Accrued   rent receivables	800
Accrued rates	240

Additional information:

i)                On 31 December 2020, Mr Lim bought a display rack for RM2,500 for business use using his personal savings.  

ii)              Through the financial year ended 31 December 2021, Mr Lim took RM960 worth of inventory and drew a cheque of RM340 for his personal use.

iii)             On 30 September 2021, Mr Lim was informed that a debtor has declared bankrupt and is unable to repay his debt of RM590. This transaction is yet to be recorded in the book. 

iv)             Purchase of return to supplier worth RM375 due to wrong specification is yet to be taken up in the book. 

v)               Stock as at 31 December 2021 has been overstated by RM370 and it has not been corrected.

vi)             Fixed deposit of RM5,000 has been made on 1 June 2021 at interest rate of 3% per annum. This has yet to be taken up in the book. p&l

vii)           Mr Lim is planning to pass the following adjustment:

a.      Annual depreciation of 10% on equipment.

b.     Provision for doubtful debt of 2% on net receivables.

Required:                                                                                                                         

a)     Prepare the statement of affairs of Ryan Enterprise as at 31 December 2020 and 2021.

(10 marks)

 

b)     Compute the net profit for the year ended 31 December 2021.

(5 marks)

 

c)     Prepare the capital account.

(5 marks)