Problem - Below is the list of accounts and normal balances of Trignometeri Sdn Bhd for the year ended 31 December 2013.
|
Accounts
|
RM
|
|
Accounts payable
|
43,000
|
|
Accounts receivable
|
56,200
|
|
Accumulated depreciation - Motor vehicle
|
285,000
|
|
Cash
|
13,000
|
|
Advertising expenses
|
16,500
|
|
Depreciation expenses
|
29,400
|
|
Insurance expenses
|
10,000
|
|
Land
|
230,000
|
|
Inventory
|
180,000
|
|
Long-term notes payable
|
54,000
|
|
Motor vehicle
|
475,000
|
|
Ordinary shares RM 1 par value
|
500,000
|
|
Prepaid insurance
|
12,000
|
|
Rent expenses
|
20,000
|
|
Retained earnings, 1 January 2013
|
34,590
|
|
Salaries expenses
|
55,000
|
|
Sales
|
402,600
|
|
Marketable securities
|
84,000
|
|
Unearned revenue
|
22,000
|
|
Utilities expenses
|
10,090
|
Additional information:
1) Inventory balance as at 1 January 2013 is RM 35,000
2) Cost of goods sold for the year ended 31 December 2013 is RM 150,000
3) Account receivable balance as at 1 January 2013 is RM 43,800
4) 75% of the sales are credit sales
Based on the above, information, you are required to answer the following questions.
(a) Compute the net profit for the year ended 31 December 2013. Show your complete working.
(b) Prepare a balance sheet for Trigonometri Sdn bhd as at 31 December 2013.
(c) Compute and explain the following ratios for Trigonometri Sdn Bhd
(i) Current ratio
(ii) Quick ratio
(iii) Net profit margin
(d) Explain how the analysis of quick ratio and current ratio assist the investors in decision making.