Memories Forever Trading is a business selling corporate souvenirs. The following transactions took place in the
month of September 2019.
The owner started the business with an initial capital of RM 100,000 cash in bank, RM 5,000 cash, RM 50,000 office furniture, RM 30,000 computer equipment. RM 30,000 renovation.
Purchased a motor van from Lim Motors costing RM 70,000. Deposit of RM 10,000 was paid by cheque and the balance is to be paid by a hire purchase instalment plan starting from next month. Hire purchase facility is with CIMB Bank.
Received invoices from Alim Enterprises RM 17,000 and Harry Enterprises RM 13,000 for goods purchased. Incurred a total of RM 600 as transportation cost for these purchases, paid cash for this.
Office rental for the month is RM 1,500. The Company paid 2 months' rental deposit of RM 3,000 and RM 6,000 as advance rental via cheque.
Sold goods on credit to Zury RM 5,000 and Khairy RM 12,000.
Placed an investment via cheque amounting to RM 15,000 for purchase of shares with Pelangi Berhad.
Paid RM 500 cash for the month's electricity expense.
The owner withdrew goods worth RM 400 for personal use.
Food and refreshments for staff RM 200. Paid cash for this.
Zury returned RM 500 worth of goods, as they were defected.
Cash sales of RM 5,000
Company received a loan from bank for its business RM 100,000.
Zury settled his account by cheque and received a cash discount of 5%.
Khairy paid RM 1,500 cheque towards his account balance.
Issued cheques of RM 10,000 being salaries for the month.
Received telephone bill for the month RM 600.
Sold goods on credit to Charles RM 5,000.
Company depreciates its assets using the straight-line method. The rate is 10% for office furniture, 20% for computer equipment, 10% for renovation and 20% for motor vehicles.
Closing inventory is valued at RM 20000
Based on the above information:
a) Prepare journal entries, using the General Journal, Sales Journal and Purchases Journal, Sales Returns Journal, Purchases Returns Journal.
b) Prepare Cash Book as at 30th September 2019.
c) Post the above transactions to their respective ledgers
d) Prepare Trial Balance for the month ending 30th September 2019.
e) Prepare Statement of Comprehensive Income for the month ending 30th September 2019.
f) Prepare Statement of Financial Position as at 30th September 2019.
g) Based on the financial statements prepared above, calculate the following ratios.
i) Gross Profit ratio
ii) Net Profit ratio
iii) Returns on Capital Employed (ROCE)
iv) Current ratio
v) Acid test ratio
vi) Debtors collection periods
vii) Creditors payment period
viii) Total asset turnover ratio
h) Interpret the above ratios in terms of the profitability, liquidity and the asset utilization of the Company.
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