(i)         A balance sheet is used to report the Ringgit amount of a company’s assets, liabilities and owners’ equity for a required period of the year. It is the statement to tell a company about their financial position. A balance sheet consists of Assets, Liabilities and Equities. The accounting equation law states that Asset = Liability + Owners Equity. Thus, the balance sheet provides a useful source of information by calculation the total asset which should be tally with the company’s total liability and equity. It presents the company’s resources and origin of sources.

(ii)        The value for creditors shown in bracket is because it is a cash outflow from the business as the accounting equation states- Asset = Liability + Equity. Creditors fall under liabilities. The creditor figure of 700 instructs us to compute the figures in the column above the line i.e. to compute the value of 67,000 and 700. The bracket around the 700 tells us to deduct the 700 from the figure of 67,000 and not to add it. The cost of capital figure is obtained by adding opening stock and purchases together and then deducting closing stock to creditors.

Hill Sdn Bhd

Trial Balance as on 30 November 20X9

The cost of capital was not given for the transactions on 30 November 20X9. Hence, according to the law of accounting equation (Asset=Liability + Owners Equity), the amount for capital is RM32, 145.00 derived from the total amount from the asset which is RM34, 945 deducted from RM2, 800 of the liabilities in the form of Creditor. The capital amount for Hill is RM32, 145.00 for the unadjusted trial balance.

The adjustments until the month of 7 December 20X9 is based on the transactions occurred from the given data from (a) to (e). The transactions are highlighted in blue color.

Hill Sdn Bhd

Balance Sheet

As at 7^th December 20X9

           

General Journal

Posting to Ledgers

Accounts Receivable Account

The balance on the accounts receivable account which is at RM1,335.00 is the amount the debtors owe us. The amount is after deducting the return on sale of goods, and some of the payments received by cash and cheque on the credit column.

Sales Account

The total sales that we have made throughout the month is at RM2,233.00 after deducting the sales returm from customers.

Purchases Account

From the above purchases account, the balance of RM2,046.00 indicates the total amount that we have to pay to our creditors for the purchases made. The total amount is after deducting the return on good for the purchases made.

Accounts Payable Account

The accounts payable account indicates any amount that are payable to our creditors. The total balance is at RM890.00 after deducting return of goods on purchases. Payments were also has been made by cheque which is deducted from the credit column.

Bank Account

The total bank account shows the amount that we have in the bank is at RM442.00. The balance of bank account was not given. Thus, the payment by cheque has been made on 20th and 26th September is identified on the credit column. Also we have received payment on the 24th and 30th September which is recorded on the debit column.

Cash Account

The above cash account indicates the total cash that we have for the month is at RM80.00. The only transaction that involves cash payment only occur once.

End of answers