QUESTION 1

a) On 6 May 20X7, Blake buys some goods for EM7,000 from Smith, and agrees to pay
for them sometime within the next two weeks. The effect of this is that a new asset,
stock of goods, is acquired, and a liability for the goods is created. A person whom
money is owed for goods is known in accounting language as a creditor. The balance
sheet becomes:
B Blake
Balance Sheet as at 6 May 20X7
Asset

RM

Shop

32,000

Stock of Goods

7,000

Cash at bank

28,000
67,000

Less : Creditor

(7,000)
60,000

Capital

i)

60,000

How does the balance sheet of an entity provide a useful source of

information?
The balance sheet is a summary of the financial condition of a business at a
particular time. Because every income and expenses affecting the financial
condition, the balance sheet will be constantly changing. Therefore, the concept of
time must be emphasized in discussing the balance-sheet.

The financial statements usually requires basic information about the type,
number and value of property owned by a business. To get this information we
need to provide inventories.
A complete inventory is a list of all financial assets and physical assets owned by
the business. It involves personnel either property such as livestock, machinery,
rice, stock and bank balances as well as real estate such as buildings and land. If
there are no records available, make an inventory is the first step in providing a
complete farm records. To complete the recording system useful, must be in the
inventory finance. Therefore, provides the inventory has two steps; physical
calculation and assessment.
ii)

Why do you think the RM7,000 value for creditors is shown in brackets?
The information in brackets is used to show the amounts that make up a
particular item which constitute a deductible of creditors.

b) Hill has the following assets and liabilities as on 30 November 20X9:

Creditors RM2,800; Equipment RM6,000; Car RM7,300; Stock of Goods RM8,100;
Debtors RM4,050; Cash at bank RM9,100. You are not given the capital amount at
that date.
During the first week of December 20X9:

Hill bought extra equipment on credit for RM110.

Hill bought extra stock by cheque RM380.
Hill paid creditors by cheque RM1,150.
Debtors paid Hill RM640 by cheque and RM90 by cash.
Hill put in an extra RM1,500 into the business, RM1,300 by cheque and
RM200 in cash.

You are required to draw up a balance sheet as on 7 December 20X9 after the above
transactions have been complete.
Hill
Balance Sheet as at 7 December 20X9

Asset

RM

RM

TOTAL

Equipment

6,000

110

6,110

Car

7,300

Stock of Goods

8,100

380

8,480

Cash at bank

9,100

1,500

10,600

Debtors

4,050

730

4,780

34,550

2,720

37,270

(2,800)

(1,150)

(3,950)

31,750

1,570

33,320

31,750

1,570

33,320

Less : Creditor

Capital

QUESTION 2

7,300

a) Enter the following transaction in the personal accounts (i.e. the creditor and debtor
accounts) only. Balance off each personal account at the end of the month. After
completing this, state which of the balances represent debtors and which represent
creditors.
20X8
Sept
1
2
8
10
12
17
20
24
26
28
30

Sales on credit to Johnny RM520; Thomas RM630; Sean RM240.

Purchases on credit Ben RM390; Raymond RM510, Patrick RM280.
Sales on credit to Thomas RM640; Lance RM418.
Purchases on credit from Raymond RM92; James RM870.
Returns inwards from Sean RM25; Thomas RM190.
Returned goods to Raymond RM12; James RM84.
Paid Ben by cheque RM390.
Johnny paid us by cheque RM400.
Paid James by cheque RM766.
Johnny paid us by cash RM80.
Lance pays us by cheque RM418.

Description
Sales to Johnny
Sales to Thomas
Sales to Sean
Purchase from Ben
Purchase from Raymond
Purchase from Patrick
Sales to Thomas
Sales to Lance
Purchase from Raymond
Purchase from James
Returns inwards from Sean
Returns inwards from Thomas
Returned goods to Raymond
Returned goods to James
Paid Ben by cheque
Johnny paid us by cheque
Paid James by cheque
Johnny paid us by cash
Lance pays us by cheque

Debit (out)

Credit (in)
520
630
240

390
510
280
640
418
92
870
25
190
12
84
390
400
766
80
418

b) Complete the gaps in the following table:

Assets
12,500
28,000
16,800
19,600
25,500
51,400
4,200
3,750

Liabilities
1,800
4,900
4,300
3,150
6,300
11,650
2,100
2,000

Capital
10,700
23,100
12,500
16,450
19,200
39,750
2,100
1,750