CONFIDENTIAL AC/JUL 2021/FAR160
UNIVERSITI TEKNOLOGI MARA
FINAL EXAMINATION
COURSE : FINANCIAL ACCOUNTING 2
COURSE CODE : FAR160
EXAMINATION : JULY 2021
TIME : 3 HOURS
INSTRUCTIONS TO CANDIDATES
1. This question paper consists of FIVE (5) questions.
2. Answer ALL questions in English
3. Please submit your HANDWRITTEN answers in ONE (1) pdf file.
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO
This examination paper consists of 9 printed pages
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CONFIDENTIAL 2 AC/JUL 2021/FAR160
QUESTION 1
A. Nour, Maryam and Fedtri were friends since undergraduate from a university at
Scotland. After meeting up at reunion event before MCO in Malaysia in 2020, they
have come out an idea to set up a partnership business selling kitchenette
merchandise through online. However, before they proceed further, they are seeking
your help to explain the advantages of the partnership.
List FOUR (4) advantages of partnership. (4 marks)
B. Ahmad, Seri and Jarrah are partners of Olive Green Partnership. They share profits
and losses in the ratio of 5:3:2 respectively. The partnership charge interest on
drawing at 10% per annum, interest on opening capital at 5% per annum and only
Ahmad and Seri are entitled to salaries of RM1,000 per month respectively.
The following information was extracted from the partnership’s book:
Capital account (RM) Current account (RM)
Ahmad 150,000 30,000
Seri 120,000 20,000
Jarrah 100,000 (10,000)
During the year ended 31 December 2020, the following transactions took place:
1. Jarrah decided to retire from the partnership on 31 August 2020. The
closing balance in Jarrah’s current statement was transferred to her capital
statement. As a settlement for her capital, it was agreed that RM60,000
would be paid by installment and the remaining of the balance due would
be settled immediately by cheque.
2. On the same day, Farah was admitted into the partnership contributing
RM50,000 cash as capital and RM20,000 for her share of goodwill.
3. Upon the admission of Farah, the following agreement was made:
i. Profits or losses of the partnership were allocated between Ahmad,
Seri and Farah at 2:2:1 respectively.
ii. No interest on capital.
iii. The interest on drawings remained unchanged.
iv. Each partner was entitled to a monthly salary as follows:
Salaries (RM)
Ahmad 1,000
Seri 1,200
Farah 800
4 On 31 August 2020, the assets were then revalued and there was deficit on
revaluation of RM20,000.
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5. Drawings made by partners during the accounting period were as follows:
Amount (RM) Date
Ahmad RM2,000 1 May 2020
Farah RM1,000 1 November 2020
6. Net profit for the year was RM150,000. This amount was assumed to be
accrued evenly throughout the year. Goodwill account would not be
maintained in the books.
(Round up your answer to the nearest RM.)
Required:
a. Prepare the following accounts as at 31 August 2020:
i. Goodwill account
ii. Revaluation account
(4 marks)
b. Prepare the following for the year ended 31 December 2020.
i. Appropriation statement showing the pre and post periods.
(7 marks)
ii. Current Statement for Jarrah.
(2 marks)
iii. Capital Statement for Jarrah.
(3 marks)
(Total: 20 marks)
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QUESTION 2
A. Explain briefly TWO (2) t y p es of charges on debentures.
(4 marks)
B. The following was the extract of Statement of Financial Position of the company:
Diamond Bhd
Statement of Financial Position (extract) as at 31 December 2019
RM
Issued and Paid-up Capital
Ordinary Share 6,000,000
8% Preference Shares 4,000,000
Reserves
Retained Earnings 1,000,000
For the year ended 31 December 2020, the following transactions took place:
1. In order to finance the company’s expansion plan, on 1 June 2020, the board of
directors of the company decided to issue 2,000,000 Ordinary shares at RM1.20
each and 1,000,000 8% Preference shares at RM2.00 each. All transactions
were paid in full upon application.
2. On 1 July 2020 applications were received and fully paid for 3,000,000 Ordinary
shares and 900,000 8% Preference shares. Any excess on the applications was
rejected and refunded on 15 July 2020.
3. On 1 September 2020, the company also issued RM4,000,000 3% Debentures
at 92. The issuance cost incurred was RM20,000. The effective interest rate was
6%. This debenture was carried at amortised cost. The interest was paid at the
end of financial year.
Required:
a) Prepare the relevant journal entries to record all the above transactions for the
year ended 31 December 2020. (Narrations are not required.)
(10 marks)
b) Prepare the Statement of Financial Position (extract) as at 31 December 2020.
(Show equity and liability section only.)
(2 marks)
c) Haleem is a risk-taker. He expects to get a high return from his investments and
prefer to vote during an annual general meeting (AGM). He plans to invest in
Maju Bhd. Advise him whether he should purchase ordinary shares or preference
shares of the company.
(4 marks)
(Total: 20 marks)
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CONFIDENTIAL 5 AC/JUL 2021/FAR160
QUESTION 3
The following information related to Barakah Engineering Bhd:
Barakah Engineering Bhd
Statement of Financial Position (extract) as at 31 December 2019
RM
Issued and Paid-up Capital
2,000,000 Ordinary Shares 2,500,000
8% Preference Shares 4,000,000
Reserves
Retained profits 4,200,000
General reserves 3,000,000
Non-Current Liability
1,000,000 units 8% Redeemable Preference Shares 2,000,000
For the year ended 31 December 2020, the following transactions took place:
1. The company decided to redeem 80% of the 8% redeemable preference shares at
RM2.00 per share.
2. For redemption purposes, the company issued 1,000,000 ordinary shares at RM1.30
per share to the public, payable in full upon application. The shares were fully
subscribed. While the remaining shortage was financed out of the profits.
3. The company made a bonus issue out of retained profits on the basis of 1 new
share for every 10 shares held as at 31 December 2019 at RM1.25 each.
4. A total of 400,000 units of the ordinary shares were repurchased from the open
market at RM1.60 each. Half of the shares repurchased were kept as treasury shares
while the balance was immediately cancelled.
Required:
Prepare the relevant journal entries to record the above transactions.
(Narrations are not required.)
(15 marks)
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QUESTION 4
The following balances were extracted from Magnolia Bhd as at 31 December 2020.
Debit Credit
Particulars RM RM
Freehold land (cost) 14,650,000
Motor Vehicles (cost) 2,800,000
Office equipment (cost) 865,000
Plant and machinery (cost) 1,980,500
Investment 1,770,000
Accumulated depreciation as at 1 January 2020:
Motor vehicles 280,000
Office equipment 56,500
Plant and machinery 594,150
Sales 15,560,250
Cost of sales 7,668,075
Trade receivables and Trade payables 660,000 485,000
Inventory as at 31 December 2020 597,360
General reserves 2,700,000
Bank 7,274,000
Ordinary shares 15,000,000
10% Preference shares 6,000,000
6% Bank loan 550,000
Taxation 534,825
Interim dividend:
Ordinary shares 900,000
10% Preference shares 300,000
Administrative expenses 1,660,000
Auditor's fees 375,000
Advertising expenses 199,000
Investment income 141,600
Interest on loan 22,000
Retained earnings as at 1 January 2020 888,260
42,255,760 42,255,760
Additional information:
1. At the end of the year, the following expenses were still outstanding:
a. Auditor’s fees amounted to RM5,000
b. Advertising expenses amounted to RM3,000
2. Depreciation on property, plant and equipment were to be provided as follows:
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i. Motor vehicles 10% on carrying value
ii. Office equipment 5% on cost
iii. Plant and machinery 12% on cost
3. The board of directors declared a final dividend for preference shares and 5% final
dividend for ordinary shares on 21 December 2020.
4. Part of interest on loan was still unpaid.
5. Taxation expenses for the year was RM520,255.
6. A transfer of RM55,000 is to be made from retained earnings to general reserves.
Required:
a. Prepare the following financial statements in a form suitable for publication and in
compliance with the Companies Act 2016 and related Malaysian Financial Reporting
Standards (MFRS) :
i. Statement of Profit or Loss and Other Comprehensive Income for the year
ended 31 December 2020.
(7 marks)
ii. Statement of Changes in Equity for the year ended 31 December 2020.
(4 marks)
iii. Statement of Financial Position as at 31 December 2020.
(8 marks)
iv. Notes for property, plant and equipment.
(6 marks)
(Total: 25 marks)
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QUESTION 5
The following balances were for Gemini Bhd, a manufacturing company located in Klang for
the year ended 31 December 2020.
RM
Carriage inwards 310,000
Water and electricity 1,500,000
Factory wages and salaries 1,498,000
Other production expenses 3,100,000
Repair and maintenance 246,850
Inventories as at 1 January 2020:
Raw materials 2,270,000
Finished goods 4,490,000
Work in progress (at production cost) 1,165,000
Purchases of raw materials 7,480,000
Administration expenses 1,389,000
Insurance on building 42,600
Sales 23,350,000
Sales return 230,280
Allowance for unrealised profit as at 1 January 2020 210,000
Additional information:
1. Inventories as at 31 December 2020 were valued as follows:
RM
Raw materials 1,600,000
Finished goods (at market value) 2,950,000
Work in progress (at production cost) 880,100
2. The company depreciated its plant and machinery at RM53,770 and delivery van
at RM36,500.
3. The following expenses should be apportioned as follows:
Factory Office
Water and electricity 2/3 1/3
Repair and maintenance 4/5 1/5
Insurance on building 3/4 1/4
4. The carriage inwards were related to the raw materials.
5. The manufactured goods were to be transferred to the Statement of Profit or
Loss at a mark-up of 15% on the production cost of finished goods.
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CONFIDENTIAL 9 AC/JUL 2021/FAR160
Required:
a. Prepare Manufacturing Account for the year ended 31 December 2020.
(10 marks)
b. Construct Statement of Profit or Loss for the year ended 31 December 2020.
(Round up your calculation to the nearest RM)
(6 marks)
c. Non-profit organization is an entity operated for a social benefit which is in contrast
with profit entity that operate to maximize profit for its owners.
Required:
Explain any TWO (2) characteristics of the Non-profit organization.
(4 marks)
(Total: 20 marks)
END OF QUESTION PAPER
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