AC/JAN 2024/FAR160

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UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE FINANCIAL ACCOUNTING 2

COURSE CODE FAR160
EXAMINATION JANUARY 2024
TIME 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any materials into the examination room unless permission is given by the
invigilator.

Please check to make sure that this examination pack consists of:

i) The Question Paper

ii) An Answer Booklet - provided by the Faculty

Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 8 printed pages
© Hak Cipta Universiti Teknologi MARA
 2 AC/JAN 2024/FAR160

QUESTION 1

A. Partnership agreement serves as a written agreement between partners regarding their

contribution and obligation to the partnership.

Required:

State the provisions that are being stated in Section 26 of the Partnership Act 1961 in
terms of the following:

i. profit sharing ratio of partners

ii. salary to partner
iii. interest on loan extended by partner
iv. interest on capital invested by partner
(4 marks)

B. Sihat, Cergas and Baik are partners in a partnership named SCB Partners with a
sharing profit ratio of 2:2:1. On 1 January 2023, the account balances were as follow:

Capital account (RM) Current account (RM)

Sihat 90,000 (12,200)
Cergas 65,000 10,400
Baik 50,000 10,000

The partnership agreement provides the following:

Items Details
Interest on opening capital 5% per annum
Interest on drawings 6% per annum
Salary received by Sihat and Cergas RM18,000 per annum

On 10 July 2023, Sihat resigned from being a partner. However, he has not yet
received his salary for the month of June 2023. It was agreed by the partnership that
any balances due to him would be settled by cheque immediately.

On the same date, Gembira joined the partnership and contributed a capital of
RM50,000 to the partnership. The value of goodwill in the partnership was agreed at
RM45.000 and it is not to be maintained in the partnership books.

A new partnership agreement was agreed as follows:

i. No interest is allowed on capital.

ii. Interest on drawings remains unchanged.
iii. Only Gembira will be given salary of RM2.300 per month.
iv. The profit or loss is shared equally among the partners.

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Additional information:

1. Upon Sihat's resignation, the assets of the partnership has been revalued as
follows:

i. The value of shop house is to be increased by RM24,500.

ii. The values of motor vehicles are to be decreased by RM8,500.

2. Drawings made by the partners during the year were as follow:

RM Date
Sihat 1,000 1 March 2023
Cergas 2,000 1 April 2023
Baik 2,500 1 May 2023
Gembira 3,000 20 November 2023

3. On 31 October 2023, Cergas transferred RM10,000 of her capital account to the

partnership's loan account. Interest on loan would be charged at 6% per annum
and treated as item of Statement of Profit or Loss. No record has been made yet.

4. Net profit for the year ended 31 December 2023 was RM168,000. This amount
was assumed to be accrued evenly throughout the year.

Show all your workings and round up your calculation to the nearest RM.

Required:

Prepare the following:

a. The Goodwill Account.

(2 marks)

b. The Revaluation Account.

(2 marks)

c. The Appropriation Statement showing the pre and post periods for the year ended
31 December 2023.
(7 marks)

d. The Current Statement for Sihat for the year ended 31 December 2023.
(3 marks)

e. The Capital Statement for Sihat for the year ended 31 December 2023.
(2 marks)
(Total: 20 marks)

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QUESTION 2

A. Give FOUR (4) characteristics of an Ordinary Share.

(4 marks)

B. The extract of the Statement of Financial Position for Arau Gemilang Bhd as at 31
December 2022 was as follows:

RM
Equity
Issued and Paid-up Capital
35,280,000 Ordinary Shares 81,144,000
7,840,000 7% Preference Shares 13,328,000

Reserves
Retained Earnings 18,816,000

The following transactions took place during the year ended 31 December 2023:

On January 2023, the company has decided to raise its capital by issuing 6,000,000
units of ordinary shares to the public at RM3.30 each payable in full on application. The
application received were 7,400,000 units. The excess application money was refunded
to the unsuccessful applicants.

The company further issued 1,000,000 units of the 7% preference shares at RM2.60
each, payable in full during the application. There were 600,000 application shares
received.

On 1 June 2023, the company issued RM800,000, 6% Debentures at a discount of 4%.

The issuance cost incurred was RM20,000. The effective interest rate was 12% per
annum and the interest was paid at the end of the year. This debenture was carried out
at amortized cost.

Required:

a. Prepare the relevant journal entries to record the above transactions (Narrations
are not required).
(10 marks)

b. Prepare the Statement of Financial Position as at 31 December 2023 by extracting

the equity and liability section only.
(2 marks)

c. The board of directors of Arau Gemilang Bhd is planning a rights issue for its
existing shareholders. Describe the following:

i. Definition of right issue.

ii. The impact of the right issue on the existing shareholders' voting rights and
dividends to be received.
(4 marks)
(Total: 20 marks)
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QUESTION 3

Given below is the statement of financial position (extract) of Kangar Jaya Bhd as at 31
December 2022:

Kangar Jaya Bhd

Statement of Financial Position (extract) as at 31 December 2022
RM
Equity
Issued and Paid-up Capital
15,000,000 Ordinary Shares 30,000,000

Reserves
Retained Earnings 9,000,000

Non-Current Liabilities
7,000,000 6% Redeemable Preference Shares 7,000,000

Additional information:

On 1 April 2023, the board of directors decided to redeem half of the 6% Redeemable
Preference Shares at its fair value of RM1.00 each and partly finance the redemption by
issuing 750,000 ordinary shares at RM3.80 each. The shares issued were fully paid and
subscribed.

On 2 April 2023, the company purchased its own ordinary shares for cancellation. Under this
scheme, 500,000 ordinary shares were bought from the open market at RM3.00 each. The
retained earnings were utilized for this purpose.

Required:

Prepare the relevant journal entries to record the above transactions for the year ended 31
December 2023 (Narrations are not required).
(Total: 15 marks)

QUESTION 4

Damar Laut Bhd has shares consisting of ordinary shares and 7% preference shares. The
following is the trial balance of Damar Laut Bhd as at 31 December 2023:

Debit (RM) Credit (RM)

Sales 5,800,000
Cost of sales 2,545,500
Commission received 24,000
Interest on fixed deposit 40,000
Administrative expenses 330,000
Selling and distribution expenses 220,000
Advertisement expense 33,300

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Directors' remuneration 278,000

Audit fees 60,100
Interest on loan 32,000
Tax paid for the year 550,000
1,000,000 units of Ordinary shares 3,500,000
600,000 units of 7% Preference shares 1,200,000
Retained earnings as at 1 January 2023 458,000
General reserve 180,000
Interim dividends:
- Ordinary shares 140,400
- 7% Preference shares 42,000
8% Fixed deposit 500,000
Freehold Land (cost) 1,900,000
Building (cost) 2,250,000
Motor vehicles (cost) 550,000
Office equipment (cost) 190,000
Accumulated depreciation as at 1 January 2023:
Building 225,000
Motor vehicles 104,500
- Office equipment 38,000
Accounts receivable 550,000
Accounts payable 420,000
Inventories 280,000
Cash at Bank 2,338,200
6% Loan from Permatang Bank 800,000
12,789,500 12,789,500

Additional information:

1. The commission received RM6,200, and audit fees of RM5.000 are still accrued, and no
adjustment was made.

2. The 6% loan from Permatang Bank was taken and approved on 5 January 2023. Part
of the payment of interest on loan was still outstanding.

3. Depreciation policy on the non-current assets was to be provided as follows:

Policy
Building 10% per annum on cost
Motor vehicles 10% per annum on carrying value
Office equipment 5% per annum on cost

The motor vehicles were used for the purpose of delivering goods to customers.

4. The board of directors has decided on the following actions:

a. To transfer RM120,000 from retained earnings to the general reserve.

b. A rights issue of 1 share for every 5 shares held is offered to ordinary shareholders
at RM2.00 each. The rights issue shares are entitled to the final dividend.
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c. The board of directors declared a final dividend of 30 sen per share for ordinary
shares and the remaining balance of the preference dividend for the financial year
ending on 31 December 2023.

5. The tax charged for the current year is RM652,270.

Required:

Prepare the following statements in a form suitable for publication and in compliance with the
Companies Act 2016 and related to Malaysian Financial Reporting Standard (MFRS):

a. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31
December 2023.
(7 marks)

b. Statement of Changes in Equity for the year ended 31 December 2023.

(4 marks)

c. Statement of Financial Position as at 31 December 2023.

(8 marks)

d. Notes to the financial statements for property, plant and equipment.

(6 marks)
(Total: 25 marks)

QUESTION 5

Nyu Sdn Bhd, a manufacturer of healthcare merchandise provided the following financial
information for the year ended 31 December 2023:

RM
Inventories as at 1 January 2023:
Raw materials 18,000
Work-in-progress valued at production cost 7,650
Finished goods at market value 39,600
Purchases of raw materials 203,850
Returned of defect raw materials 24,750
Carriage inwards - raw materials 2,745
Wages of production line operators 140,000
Hire of special machine 27,000
Sales 1,260,000
Sales return 39,600
Maintenance of plant and machinery 9,000
Administrative expenses 49,500
Supervisors' salaries 46,305
Selling and distribution expenses 38,250
Depreciation - Plant and machinery 27,000
Depreciation - Motor vehicle 9,000
Allowance for unrealized profit as at 1 January 2023 7,920

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Additional information:

1. Inventories as at 31 December 2023 were as follows:

Raw materials RM18,900

Work-in-progress valued at production cost RM9,450
Finished goods at market value RM54,000

2. The finished goods that were manufactured were to be transferred to the Statement of
Profit or Loss at production cost plus 25%.

3. Wages of production line operators amounting to RM4,900 have been incurred but not
yet paid and recorded.

4. Allocation of expenses was as follows:

Factory Administration
Administrative expenses 30% 70%
Depreciation - Motor vehicle 20% 80%

Required:

a. Prepare the Manufacturing Account for the year ended 31 December 2023.
(10 marks)

b. Prepare the Statement of Profit or Loss for the year ended 31 December 2023.
(6 marks)

c. Explain briefly FOUR (4) sources of income of a non-profit organization that are different
from a trading business.
(4 marks)
(Total: 20 marks)

END OF QUESTION PAPER

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