1. Tutorial 7: Principles of Internal Checks
Question 1
Ann Enterprise was opened for business since January 2004 and closes its accounts at the end of
each year. The unadjusted accounts balances of Ann Enterprise as at 31 December 2006 are as
follows:
Cash 23,500
Accounts receivable 11,500
Office supplies 4,300
Prepaid insurance 6,000
Office equipment (1/1/2004) 60,000
Accumulated depreciation - office equipment 18,000
Accounts payable 5,530
Notes payable 15,000
Unearned revenue 12,000
Ann, Capital 37,970
Ann, Drawing 6,700
Service revenue 53,000
Wages expense 18,000
Rent expense 5,500
Utility expense 3,900
Maintenance expense 2,100
Additional information:
a) Rent expense is RM500 per month. Rent expense for the month of December is
still unpaid.
b) Ann Enterprise received RM12,000 at the early month of December for services
performed until end of May 2007. The charges rate for the services is equally
distributed among those months.
c) Prepaid insurance represented one year premiums purchased at April 1, 2006.
d) Fees earned but unbilled on December 31 are RM4,250.
e) Supplies on hand at December 31 are RM1,750.
f) Depreciation of equipment is based on the straight line method. The equipment
has 10 years estimated life with no scrap value.
Required:
i. Journalise the adjusting entries at 31 December 2006.
ii. Prepare an adjusted trial balance for Ann Enterprise as at 31 December 2006.

2. Question 2
The following was extracted from Yong’s Trial Balance:
RM
Debtors 6,000
Bad debts 500
It was decided to write-off an additional 5% of debtors as bad debts and 2% as Provision for
Doubtful Debts.
Prepare:
(a) The Bad Debts Account.
(b) The Doubtful Debts Account
(c) The Provision for Doubtful Debts Account.