Answer to Question #158530 in Accounting for kris

Question

On 31 December 2017, Betty Trading showed the following details of accounts: On 1 January 2016, Betty purchased motor vehicle (A), RM30,500 by cash. On 1 January 2017, Betty bought another motor vehicle (B) RM22,000 by cheque. The company uses the straight line method at the rate of 10% per annum on cost in order to depreciate their non- current assets. On 31 December 2018, motor vehicle (A), which was bought on 1 January 2016 was sold cash for RM19,500. a) You are required to prepare the ledger accounts as follows for 2016, 2017 and 2018: i) Motor vehicle account [5 marks] ii) Accumulated Provision for depreciation motor vehicle account [7 marks] b) Prepare motor vehicle disposal account [5 marks] c) Identify THREE (3) causes of depreciation on the non-current assets.

Answer 1

Income statement as on 31.12.17

-------------------------------------------- (Amount in RM)

Sales 959000

Less: Returns (64000+2000)  66000

----------- ---

Renal 66000

Less. prepaid 3000

------------

63000

Discount Received 3500

Total Income ---------------

959500

===========

Opening Stock 18000

Add: Purchases 678000

Less Returns 32000+2000 (34000)

Less Closing stock (16500)

--------------

645500

Rental 33000

Salary 38000

Vehicle Maintenance 19000

Utilities 2500

Bad Debts

(12000+42500+3000) 57500

Carriage inwards 25000

Carriage Outwards 13000

Discount allowed 1000

Insurance(29000-2000+5000}32000

Interest on Loan

(25000+5000+5000) 35000

Depreciation

-Motor Vehicle 100000

-Office equipment 7500 107500

Loss on damage 5500

Total Expense 10,14,500

Loss =55000

Balance Sheet as on 31-12.2017