Suwit Semailee Berhad (SSB) is a manufacturer of branded and generic prescription pharmaceuticals, vaccines and over-the-counter...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suwit Semailee Berhad (SSB) is a manufacturer of branded and generic prescription pharmaceuticals, vaccines and over-the-counter medications, based in Penang, Malaysia. The company was established in 2000 and it is now in the process of business expansion pace. The company closes its account on 31 March. The following is the summary of SSB's statement of financial position as at 31 December 2021 (the third quarter of the accounting year): Assets Plant (net) Inventory Receivables Cash Equity and Liabilities Share capital-ordinary Retained earnings RM2,725,000 575,000 550,000 Accounts payable 410,000 4,260,000 RM 2,000,000 1,885,000 375,000 SSB is fighting a legal case with Boleh Jadi Berhad (BJB) for two years. There was a transaction between both companies in 2019 where BJB was supposed to supply goods to SSB for the return of RM600,000. The goods were delivered far behind the agreed date and some of the goods had already expired. BJB offered to replace all the goods, but SSB did not agree for replacement and denied payment to BJB. The case was filed in court by BJB demanded a full payment and compensation of RM400,000 for the harassment. It has been two years and the court will continue the hearing in February 2022. It seems that SBB is losing the case and total payment of RM1,000,000 is to be made to BJB. Mr Aidil, the accountant of SSB Bhd is not familiar with this event and not sure on how to account for the court case. 4,260,000 The company currently issued 800,000 ordinary shares. The management is planning to distribute 20% share dividend as part of strategy to move its retained earnings to share capital REQUIRED: Due to the need for business expansion, the management is also considering on the issuance of more shares to induce the capital of the company. Among the options is issuing additional 200,000 ordinary shares at a price of RM2.75 per share. Another option is issuing 9% preference shares, whether a non-cumulative or callable preference share. The CEO in the earlier discussion with two of the directors showed more interest in issuing ordinary shares rather than preference. However, the two directors had the opposing view due to certain reasons. On 1 January 2022, the company issued 100,000 ordinary shares at a price of RM2.75 per share, for the exchange of herbal oil extraction machine worth RM290,000. Despite the arguments on the types of shares to be issued, the company also on the same date, issued 300,000 ordinary shares for RM2.80 per share. The legal fees incurred in relation to the issuance of the share were RM3,000. The decisions on issuing ordinary shares were passed by a simple majority among board of directors. The two directors involved in the initial discussions with the CEO are still not satisfied with the decision. They plan to have another meeting with the CEO on the matters. (a) Identify the issue(s)/problem(s) faced by the accountant of SSB. (CTPS Question -Problem identification) (b) Analyse the issue(s)/problem(s) faced by SSB by referring to the MFRS 137 Provisions, Contingent Liabilities and Contingent Assets (CTPS Question -Problem analysis) (c) Help the accountant of SSB to make a decision related to the above issue(s). (CTPS Question - Generation of solution, evaluation and decision making). (d) Discuss the impact of issuance of share dividends to the existing shareholders. (Knowledge) (e) Discuss and help the two directors on how the company can benefit from issuing preference shares compared to ordinary. (Knowledge) (f) Prepare journal entries to record transactions on 1 January 2022. Please include the narration of the entries. (Knowledge) Suwit Semailee Berhad (SSB) is a manufacturer of branded and generic prescription pharmaceuticals, vaccines and over-the-counter medications, based in Penang, Malaysia. The company was established in 2000 and it is now in the process of business expansion pace. The company closes its account on 31 March. The following is the summary of SSB's statement of financial position as at 31 December 2021 (the third quarter of the accounting year): Assets Plant (net) Inventory Receivables Cash Equity and Liabilities Share capital-ordinary Retained earnings RM2,725,000 575,000 550,000 Accounts payable 410,000 4,260,000 RM 2,000,000 1,885,000 375,000 SSB is fighting a legal case with Boleh Jadi Berhad (BJB) for two years. There was a transaction between both companies in 2019 where BJB was supposed to supply goods to SSB for the return of RM600,000. The goods were delivered far behind the agreed date and some of the goods had already expired. BJB offered to replace all the goods, but SSB did not agree for replacement and denied payment to BJB. The case was filed in court by BJB demanded a full payment and compensation of RM400,000 for the harassment. It has been two years and the court will continue the hearing in February 2022. It seems that SBB is losing the case and total payment of RM1,000,000 is to be made to BJB. Mr Aidil, the accountant of SSB Bhd is not familiar with this event and not sure on how to account for the court case. 4,260,000 The company currently issued 800,000 ordinary shares. The management is planning to distribute 20% share dividend as part of strategy to move its retained earnings to share capital REQUIRED: Due to the need for business expansion, the management is also considering on the issuance of more shares to induce the capital of the company. Among the options is issuing additional 200,000 ordinary shares at a price of RM2.75 per share. Another option is issuing 9% preference shares, whether a non-cumulative or callable preference share. The CEO in the earlier discussion with two of the directors showed more interest in issuing ordinary shares rather than preference. However, the two directors had the opposing view due to certain reasons. On 1 January 2022, the company issued 100,000 ordinary shares at a price of RM2.75 per share, for the exchange of herbal oil extraction machine worth RM290,000. Despite the arguments on the types of shares to be issued, the company also on the same date, issued 300,000 ordinary shares for RM2.80 per share. The legal fees incurred in relation to the issuance of the share were RM3,000. The decisions on issuing ordinary shares were passed by a simple majority among board of directors. The two directors involved in the initial discussions with the CEO are still not satisfied with the decision. They plan to have another meeting with the CEO on the matters. (a) Identify the issue(s)/problem(s) faced by the accountant of SSB. (CTPS Question -Problem identification) (b) Analyse the issue(s)/problem(s) faced by SSB by referring to the MFRS 137 Provisions, Contingent Liabilities and Contingent Assets (CTPS Question -Problem analysis) (c) Help the accountant of SSB to make a decision related to the above issue(s). (CTPS Question - Generation of solution, evaluation and decision making). (d) Discuss the impact of issuance of share dividends to the existing shareholders. (Knowledge) (e) Discuss and help the two directors on how the company can benefit from issuing preference shares compared to ordinary. (Knowledge) (f) Prepare journal entries to record transactions on 1 January 2022. Please include the narration of the entries. (Knowledge)
Expert Answer:
Answer rating: 100% (QA)
a The accountant of SSB is faced with the problem of how to account for the legal case with Boleh Jadi Berhad There is a possibility that the company may have to pay a large amount of money as compens... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Posted Date:
Students also viewed these accounting questions
-
R and R patented this process with the 'Baby Boomer' generation in mind. This is the demographic of the population between the ages of 57 and 75. They are the market that is most likely to place an...
-
CHOOSE THE CORRECT ANSWER: 1. If R & S is true, then which of the following is correct? A. R is true. B. R is false. C. R could be true or false. 2. If R & S is false, then which of the...
-
R = 5 with probability 0.25, R = 0.25 with probability 0.25, R = 1 with probability 0.5. Find the arithmetic and geometric means of the random variables R for per capita production in the above...
-
Project P costs $15,000 and is expected to produce benefits (cash flows) of $4,500 per year for five years. Project Q costs $37,500 and is expected to produce cash flows of $11,100 per year for five...
-
The Hartono Corporation manufactures and sells industrial grinders. The following table presents financial information pertaining to quality in 2013 and 2012 (in thousands): REQUIRED 1. Classify the...
-
The following data represent the stock price for the Walt Disney Company at the end of each month in 2010. Construct a time-series plot and comment on any trends. What was the percent change in the...
-
Visit www.pearsonglobaleditions.com/malhotra to read the video case and view the accompanying video. Subaru: Mr. Survey Monitors Customer Satisfaction presents an interesting overview of Joe...
-
Each hour from 10 A.M. to 7 P.M., a bank receives checks and must process them. Its goal is to process all checks the same day they are received. The bank has 13 check processing machines, each of...
-
If Jamaal earns $28.90 per hour, estimate how much he would earn per year. Assume that he works 40 hours per week and 50 weeks per year. Give your answer in whole dollars (no cents). Jamaal's...
-
1. How will you characterize Tupperwares distribution strategy in relation to the theoretical models? 2. What are the advantages and disadvantages of Tupperwares distribution model? 3. How do you...
-
C Companys risk-free interest rate is 6 percent. The standard deviation in the rate of change in the underlying asset's value is percent, and the leverage ratio of C Company is 0.9. C Company has a...
-
Now that Brexit is a reality, how has it affected the strategic and operational decisions that managers, in the UK and outside, make?
-
How can e-commerce aid strategy implementation?
-
Many companies have focused on cost savings and outsourced manufacturing to China. However, many global supply chains were impacted when COVID-19 shut the Chinese borders. What are some lessons...
-
Given the challenges in implementing strategic alliances, what are some guidelines for successful alliances?
-
What are some reasons that motivate companies to engage in global and cross-border alliances?
-
I am working on a project for an accounting class and need to fill in balance sheet like the one below but mine is for Amazon. the one for Kohl's is just an example. The info for amazon is on this...
-
Players A, B, and C toss a fair coin in order. The first to throw a head wins. What are their respective chances of winning?
-
In Problem 17-31, Larsen Company uses the weighted- average method of process costing. Data for the assembly department for October 2014 are as follows: Prepare a set of summarized journal entries...
-
When evaluating alternative ways to improve quality, managers need to consider the fully allocated costs of quality. Do you agree? Explain.
-
The Grand Meter Corporation manufactures electrical meters. For August, there were no beginning inventories of direct materials and no beginning or ending work in process. Grand Meter uses a JIT...
-
Use the Young's Modulus - Density ( \(E-ho\) ) chart of Fig. 3.3 to find (a) metals that are stiffer and less dense than steels and (b) materials (not just metals) that are both stiffer and less...
-
Use the Young's modulus - Density \((E-ho)\) chart of Fig. 3.3 to identify materials with both a modulus \(E>50 \mathrm{GPa}\) and a density \(ho Fig.3.3 oungs modulusE GPa Coungos modulus density...
-
Use the \(E / ho\) chart of Fig. 3.3 to identify materials with both \(E>100 \mathrm{GPa}\) and \(E^{1 / 3} / ho>0.003(\mathrm{GPa})^{1 / 3} /\left(\mathrm{kg} / \mathrm{m}^{3} ight)\). Remember...
Study smarter with the SolutionInn App