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Prepare the income statement for Fuller Bhd. for the year ended 31 December 2013vii. Inventory as at 31 December 2013 is RM250,000.

Question 3 (Total: 20 marks)
The following balances have been extracted from the books of Fuller Bhd., a cloth
manufacturer and wholesaler, at 31 December 2013:
Debit
(RM’000)
Credit
(RM’000)
Plant and machinery at cost 3,000
Accumulated depreciation at 1 January 2013 – plant
and machinery 1,200
Motor vehicles at cost 800
Accumulated depreciation at 1 January 2013 – motor
Vehicles 400
Trade receivables 1,050
Purchases 4,550
Sales returns 150
Trade payables 500
Finance expense 110
Purchase returns 80
Administration expenses 700
Bank overdraft 200
Selling and distribution expenses 1,000
Sales 7,750
Discount received 125
Loan 1,000
Discount allowed 200
Retained earnings at 1 January 2013 545
Inventory at 1 January 2013 300
Provision for doubtful debts 1 January 2013 60
11,860 11,860
Additional information:
i. Audit and accountancy fees of RM10,000 have not been taken into account at
31 December 2013.
ii. Payments for insurance premiums of RM30,000 have been made on 1 July
2013 but have not been included in the account. These premiums provide
insurance cover for the business up to 30 June 2014.
iii. A customer of Fuller Bhd. has gone into liquidation, owing Fuller RM50,000 and
this amount will be treated as a bad debt.
iv. The provision for doubtful debts is to be adjusted to 4% of trade receivables
after the deduction of debts which are irrecoverable.
v. Depreciation for the year to 31 December 2013 has not been calculated yet.
Plant and machinery is to be depreciated at 20% per annum on a straight-line
basis and motor vehicles are to be depreciated at 25% per annum on a
reducing balance basis.
vi. Taxation on profit for the year is to be calculated as 25% of the profit before tax.
viii. The classification of the expenses is as follows:
Items
Selling and
distribution Administration
Discount allowed 50% 50%
Provision for doubtful debts and bad debts,
insurance premiums and audit and accountancy
fees – 100%
Depreciation – plant and machinery 20% 80%
Depreciation – motor vehicles 70% 30%
Required:
Prepare the income statement for Fuller Bhd. for the year ended 31 December 2013vii. Inventory as at 31 December 2013 is RM250,000.

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