ACCOUNTING FOR MANAGERS

FIN 6063
MBA GB-DA
Group Name:
1. BIANCA BEATRICE
SCM-031386
2. FARHAN
3. REFKA
4. DANA

SELOKA COMPANY
ADJUSTMENT ENTRIES
Year-end at 31ST December 2012

(In Malaysian Ringgit)

a. Prepaid insurance at the end of the year : 4600 3450 = 1150
Journal entry :
Insurance expense
Prepaid insurance

3450
3450

b. Unearned sales revenue : 4000 (3/4 x 4000) = 1000

Journal entry :
Unearned sales revenue
Sales revenue

3000
3000

c. Accrued interest on notes receivables : 5/12 x 9600 x 9% = 360

Journal entry :
Interest receivable
Accrued Interest income

360
360

d. Accrued interest expense on notes payable : 30000 x 12% = 3600

Journal entry :
Interest expense
Interest payable

3600
3600

e. Bad debts expense accounts : 1% x (785250-38750) = 7465

Bad debts expense = uncollectible estimated*(Sales Revenue Sales Return
and Allowance)
Journal entry :
Bad debt expense
Allowance for doubtful acc.

7465
7465

Written off account:

Allowance for doubtful acc
Account receivables
f.

1000
1000

Unrecorded sales revenue :

Journal entry :
Account receivable
Sales revenue

9100

g. Preferred stock dividends : (7% x 5) x (50000/5) = 3500

7% preferred stock at par value RM5
Journal entry :

9100

Retained earnings
Dividends payable

3500
3500

h. New Equipment = 13000 cash + 6000 allowance = 19000

Acc Depreciation = (12000 old equipment 800 residual value)/ 4 years
=2800*3 = 8400 (1 jan 2009- 1 jan 2012)
Gain on Equipment = 6000 allowance (12000-8400) =2400
Journal entry :[]New Equipment
Accumulated
Depreciation- Old
Equipment
Old Equipment
Cash
Gain on Equipment

19000
8400

12000
13000
2400

Depreciation Expense New Equipment = (19000 2400)/4 = 4150

Depreciation Expense
Accumulated Depreciation
i.

4150
4150

Property depreciation : 500000 x 2% = 10000

Equipment depreciation : 83000 12000 = 71000*25% = 17750
PPE depreciation = 27750
Journal entry :
PPE depreciation expense
Accumulated depreciation

27750
27750

Adjusted account :
1.
2.
3.
4.
5.
6.

Cash : 32200 13000 = 19200 (D)

Acc. Receivables = 26000 1000 + 9100 = 34100 (D)
Allowance for doubtful accounts : 1361 1000 + 7465 = 7826 C
PPE : 583000 + 19000 12000 = 590000 D
Accumulated Dep. PPE : 204000 8400 + 4150 +27750 =227500 C
Sales revenue : 785250 + 3000 + 9100 = 797350

Seloka Company
Income Statement

Year end 31st December 2012

(In Malaysian Ringgit)
Debit
Adjusted Sales Revenue
Sales return and
allowance
COGS
Gross Profit
Operational expenses
Selling and distribution
exp
Administration exp
Other operating exp
Operational profit
Other expenses/income
Insurance expense
Interest income
Interest expense
Bad debt expense
Gain on equipment
Depreciation expense

Credit
788250

38750
460800
288700
61560
92160
37870
97110
3450
362.17
3600
941.10
4400
46900

Tax rate (0%)

Net income after tax

69381.07

Preferred stock
dividends
Net income applicable
to common stock

3500
46981.07

Earnings per share

0.59

Seloka Company

Changes in Stockholders equity

Year end 31st December 2012
(In Malaysian Ringgit)

Balance
before
adjustments
at year end
31 Dec 2012
Net income
Common
stock cash
dividends
Balance
after
adjustment
s at year
end 31 Dec
2012

Common
Stock

Preferre
d stock

200000

50000

Paid in
Capital in
excess of
PAR
19500

Retained
earnings

Treasury
stock

Total
Stockhold
ers Equity

51589

(3500)

317589

46981.0
7
(7860)

200000

50000

19500

90710.
07

46981.07
(7860)

(3500)

356710.0
7

Seloka Company
Balance Sheet
Year end 31st December 2012
(In Malaysian Ringgit)
ASSETS
Current Assets
Cash
Account Receivable
Allowance for Doubtful
Account
Prepaid insurance
Insurance expense
TOTAL
Non-current assets
Notes receivable
Interest Receivable
Patent
Property, Plant and
Equipment
Accumulated Depreciation
TOTAL
TOTAL ASSETS

13200
25000
(1302.10)
1150
(3450)
34579.9
9600
362.17
80000
584000
(265261)
445462.17
480,042.07

LIABILITIES
Current Liabilities
Account Payable

25000

Interest Payable

3600

Dividends
Payable:Preferred
stock
Unearned sales
revenue
TOTAL
Long-term
Liabilities

3500

Notes Payable- Long

term

STOCKHOLDERS EQUITY

1000
33100

30000

Preferred stock at
5RM PAR value
Common stock at
2RM PAR Value
Additional Paid in
Capital
Treasury Stock 1000
at cost 3.50RM
Retained earnings
TOTAL
STOCKHOLDERS
EQUITY

50000
200000
19500

(3500)
46981.07
312981.07

Bond Payable
Bond discount
TOTAL
TOTAL LIABILITIES

70000
2800
97200
130300

TOTAL LIABILITIES
AND
STOCKHOLDERS
EQUITY

462181.07