NAMA AHLI :

1) WAN MUSTAFFA BIN WAN YUSOFF

2) MORIZA BINTI FIKRI
3) HANIZA BINTI MUHAMMAD
4) AHMAD YASRUDDIN BIN MD YASIN
5) MOHD FIRDAUS MUSTAKIM BIN YAHYA
INTRODUCTION TO SMART ACCOUNTING
Smart Accounting is a systematic process
in settling account adjustment and also in
preparing financial statement. This
method presents some measures that must
be followed in producing the answer fast
and accurate and gain better marks.
SMART ACCOUNTING STEPS
Accounts Debit (RM) Credit (RM)
Debtors &Creditors 15,500 27,500
Provision for doubtful debts 2,000
Furniture 120,000
Office Equipment 86,000
Accumulated Depreciation Funiture 10,400
Inventories (1 January 2012) 22,000
Bank 12,000
Capital 72,000
Purchases & Sales 250,000 370,000
Returns 14,600 13,800
Discount Allowed & Discount Received 5,200 8,500
Carriage Inwards 3,700
Carriage Outwards 2,300
Mortgage 32,000
Advertising 10,500
Insurance 8,400
Interest Received 14,000
550,200 550,200
FIRST STEP: READ THE QUESTION

Mili and Mila opened a business. Below is Trial Balance as at 31 December 2012 for Mili and Mila Enterprise.
SMART ACCOUNTING STEPS
Additional Information:
a) Inventories on 31 December 2012 RM 28,000.
b) Office equipment and furniture is to be depreciated at a
rate 10% using straight line method.
c) Insurance is RM 580 per month.
d) Interest received is advance by RM 500.
e) Bad debts RM 140 to be written off. Provision for doubtful
debts was10% on debtors.

You are required to prepare:
1) Income Statement for the year ending 31 December 2012.
2) Statement of Financial Position as at 31 December 2012.
Business Name
Income statement for the year ended.
RM RM RM
Sales
(-) Return inwards
Net Sales
Less: Costs of goods sold
Opening inventory
Purchases
(-) Return outwards
Net purchases

Wages
Packaging
Import duties
Insurances on purchases
Freight inwards
Purchases costs
Costs of goods available for
(-)Closing inventory
Costs of Goods Sold
SECOND STEP: PROVIDE BLANK FINANCIAL STATEMENT
RM RM RM
Gross profit

Add: Revenues
Discount received
Interest received



Less: Operating expenses
Carriage outwards
Discount allowed
Advertising
Insurances







Net profit

Business Name
Statement of Financial Position as at..
Non-current assets:
Furniture
(-) AD





Current assets:
Accounts receivable
(-) PDD




Total current assets
Total assets


Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Current liabilities:
Accounts payable
Bank
Total current liabilities
Working capital
Financed by:
Capital
Add Net profit

Less Drawings
Total equity

Non-current liabilities:
Mortgage


Total equity and liabilities


Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012
RM RM RM
Sales 370,000
(-) Return inwards (14,600)
Net Sales

Less: Costs of goods sold
Opening inventory 22,000
Purchases 250,000
(-) Return outwards (13,800)
Net purchases
Wages
Packaging
Import duties
Insurances on purchases
Freight inwards 3,700
Purchases costs
Costs of goods available for
(-)Closing inventory
Costs of Goods Sold
THIRD STEP: FILL IN FINANCIAL STATEMENT WITHOUT ADJUSTMENT
Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit

Add: Revenues
Discount received 8,500
Interest received 14,000



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 8,400


Net profit

Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012

Non-current assets:
Furniture 120,000
(-)PFD 10,400
Office equipment 86,000




Total non-current assets

Current assets:
Accounts receivable 15,500
(-) PDD 2,000
Bank 12,000

Total current assets
Total assets


Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Current liabilities:
Accounts payable 27,500

Total current liabilities
Financed by:
Capital 72,000
Add Net profit

Less Drawings
Total equity

Non-current liabilities:
Mortgage 32,000


Total equity and liabilities


FORTH STEP: SOLVE ADJUSTMENT
Additional Information:
a) Inventories on 31 December 2012 RM 28,000.
Record:

* 28,000 SOFP (Inventory)
* 28,000 IS (Inventory)

Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012
RM RM RM
Sales 370,000
(-) Return inwards (14,600)
Net Sales

Less: Costs of goods sold
Opening inventory 22,000
Purchases 250,000
(-) Return outwards (13,800)
Net purchases
Wages
Packaging
Import duties
Insurances on purchases
Freight inwards 3,700
Purchases costs
Costs of goods available for
(-)Closing inventory 28,000
Costs of Goods Sold
Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Non-current assets:
Furniture 120,000
(-) PFD 10,400

Office equipment 86,000


Total non-current assets

Current assets:
Accounts receivable 15,500
(-) PDD 2,000
Bank 12,000
Inventory 28,000
Total current assets
Total assets


FORTH STEP: SOLVE ADJUSTMENT
Additional Information:
b) Office equipment and furniture is to be depreciated at a rate 10%
using straight line method.
Record:
OE:
* (10% X 86,000 = 8,600) SOFP (AD-OE)

* (10% X 86,000 = 8,600) IS (AD-OE)

FUR:
* (10% X 120,000 = 12,000) SOFP (AD-OE)

* (10% X 120,000 = 12,000) IS (AD-OE)


Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Non-current assets:
Furniture 120,000
(-) PFD 10,400

Office equipment 86,000
(-) PFD 8,600


Total non-current assets

Current assets:
Accounts receivable 15,500
(-) PDD 2,000
Bank 12,000

Total current assets
Total assets


Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit

Add: Revenues
Discount received 8,500
Interest received 14,000



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 8,400
Provision for Depreciation (OE) 8,600



Net profit

Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Non-current assets:
Furniture 120,000
(-)PFD 22,400 10,400

Office equipment 86,000
(-) PFD 8,600


Total non-current assets

Current assets:
Accounts receivable 15,500
(-) PDD 2,000
Bank 12,000

Total current assets
Total assets


Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit

Add: Revenues
Discount received 8,500
Interest received 14,000



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 8,400
PFD(OE) 8,600
PFD(FUR) 12,000



Net profit

FORTH STEP: SOLVE ADJUSTMENT
Additional Information:
c) Insurance is RM 580 per month.
Record:

* (580 X 12 = 6,960) IS (Insurance)

* (8,400 6,960 = 1,440) SOFP ( Prepaid Insurance)


Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit

Add: Revenues
Discount received 8,500
Interest received 14,000



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 6,960 8,400
PFD(OE) 8,600
PFD(FUR) 12,000

Net profit

Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Non-current assets:
Furniture 120,000
(-) PFD 22,400 10,400

Office equipment 86,000
(-) PFD 8,600

Total non-current assets

Current assets:
Accounts receivable 15,500
(-) PDD 2,000
Bank 12,000
Inventory 28,000
Prepaid Insurance 1,440
Total current assets
Total assets


FORTH STEP: SOLVE ADJUSTMENT
Additional Information:
d) Interest received is advance by RM 500.
Record:
* 500 IS (Interest receive)
* 500 SOFP (Prepaid Interest receive)




Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit

Add: Revenues
Discount received 8,500
Interest received 13,500 14,000



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 6,960 8,400
PFD(OE) 8,600
PFD(FUR) 12,000



Net profit

Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Current liabilities:
Accounts payable 27,500
Bank 12,000
Prepaid interest received 500
Total current liabilities
Working capital
Financed by:
Capital 72,000
Add Net profit

Less Drawings
Total equity

Non-current liabilities:
Mortgage 32,000


Total equity and liabilities

FORTH STEP: SOLVE ADJUSTMENT
Additional Information:
e) Bad debts RM 140 to be written off.
Record:
* 140 IS (Bad debt)
* 140 SOFP (Bad debt)


Provision for doubtful debts was 10% on debtors
Record:
* (10% X 15,360 = 1,536) SOFP (PDD)
* (2,000-1,536= 464) IS (PDD)






Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit

Add: Revenues
Discount received 8,500
Interest received 13,500 14,000



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 6,960 8,400
PFD(OE) 8,600
PFD(FUR) 12,000
Bad debt 140


Net profit

Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Non-current assets:
Furniture 120,000
(-) PFD 22,400 10,400

Office equipment 86,000
(-) PFD 8,600
Total non-current assets

Current assets:
Accounts receivable 15,500
Bad debt 140
15,360
(-) PDD 2,000
Bank 12,000
Inventory 28,000
Prepaid Insurance 1,440
Total current assets
Total assets

Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Non-current assets:
Furniture 120,000
(-) PFD 22,400 10,400

Office equipment 86,000
(-) PFD 8,600
Total non-current assets

Current assets:
Accounts receivable 15,500
Bad debt 140
15,360
(-) PDD 1,536 2,000
Bank 12,000
Inventory 28,000
Prepaid Insurance 1,440
Total current assets
Total assets


Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit

Add: Revenues
Discount received 8,500
Interest received 13,500 14,000
PDD (overstated) 464



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 6,960 8,400
Accumulated Depreciation (OE) 8,600
Accumulated Depreciation (FUR) 12,000
Bad debt 140

Net profit

Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012
RM RM RM
Sales 370,000
(-) Return inwards (14,600)
Net Sales 355,400

Less: Costs of goods sold
Opening inventory 22,000
Purchases 250,000
(-) Return outwards (13,800)
Net purchases 236,200
Wages
Packaging
Import duties
Insurances on purchases
Freight inwards 3,700 239,900
Costs of goods available for 261,900
(-)Closing inventory (28,000)
Costs of Goods Sold 233,900
FIFTH STEP: COMPLETE FINANCIAL STATEMENT
Mili and Mila Enterprise
Income statement for the year ended 31 Dec. 2012

RM RM RM
Gross profit 121,500

Add: Revenues
Discount received 8,500
Interest received 13,500 14,000
PDD (overstated) 464 22,464
143,964



Less: Operating expenses
Carriage outwards 2,300
Discount allowed 5,200
Advertising 10,500
Insurances 6,960 8,400
PFD(OE) 8,600
PFD(FUR) 12,000
Bad debt 140 45,700
Net profit 98,264

Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Non-current assets:
Furniture 120,000
(-) PFD 22,400 10,400 97,600

Office equipment 86,000
(-) PFD 8,600 77,400
Total non-current assets 175,000

Current assets:
Accounts receivable 15,500
Bad debt 140
15,360
(-) PDD 1,536 2,000 13,824
Bank 12,000
Inventory 28,000
Prepaid Insurance 1,440
Total current assets 55,264


Mili and Mila Enterprise
Statement of Financial Position as at 31 Dec. 2012
Current liabilities:
Accounts payable 27,500
Prepaid interest received 500
Total current liabilities 28,000
Working capital 27,264
Total assets 202,264
Financed By:
Capital 72,000
Add Net profit 98,264
Total equity 170,264
Less Drawings
Total equity

Non-current liabilities:
Mortgage 32,000
Total equity and liabilities 202,264